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Why Smith & Wesson Holding, Oxford Industries, and Cognex Slumped Today

By Dan Caplinger - Mar 24, 2016 at 6:51PM

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Even though the stock market clawed its way back to breakeven, these stocks lost ground. Find out why.


Image: Smith & Wesson.

The stock market closed near the unchanged mark on Thursday, but the session was anything but boring. Stocks initially fell fairly sharply near the open, responding to mixed messages regarding the future course of monetary policy in the U.S. and the state of the global economy more broadly.

Yet in another example of the market's resiliency, major market benchmarks managed to claw their way back upward later in the day. Nevertheless, stock indexes finished the week with a loss for the first time since early February, and Smith & Wesson Holding (SWBI -4.72%), Oxford Industries (OXM -2.28%), and Cognex (CGNX -3.28%) were among the weaker performers in the market on Thursday.

Smith & Wesson fell 9% in response to negative news from elsewhere in the gun sector. Sportsman's Warehouse released its fourth-quarter results after the market closed Wednesday afternoon, and even though the company posted better results for the quarter than investors had expected, its guidance for the current quarter and full fiscal year suggested negative trends that could also affect Smith & Wesson's business.

In particular, the outdoor-sports retailer said that, after a big spike in firearm demand, February showed weaker results in gun sales. Moreover, as the gun-control debate continues, Smith & Wesson faces a longer-term risk that attitudes that have thus far failed to slow its growth could lead to tighter restrictions and less production at some point in the future.

Oxford Industries declined 7% after reporting its own fourth-quarter results Wednesday night. The apparel maker said that sales climbed about 4% for the holiday quarter, helping earnings to inch up from year-earlier levels. Comparable-store sales at its Lilly Pulitzer chain soared 27%, and the Tommy Bahama brand also contributed to Oxford's overall growth.

However, the company's revenue outlook for the current fiscal year was a bit less than expected, in a range of $1.02 billion to $1.04 billion. Moreover, adjusted earnings of $3.75 to $3.95 per share would be well short of the $4 per-share consensus figure among investors. Oxford's outlook suggests a continuing competitive environment for apparel, and that could weigh on the entire industry this year.

Finally, Cognex lost 5%. The maker of technology that drives vision-sensor systems got downgraded by an analyst firm Thursday, and analysts argued that capital expenditures remain weak among the company's potential customer base. In addition, new mobile devices that are harkening back to technology that is not on the cutting edge makes it possible for device manufacturers to use older equipment in their production process, and that could cost Cognex some capacity, as well. With fears that the company might not be able to meet the expectations that investors have for it, Cognex will need to establish its ability to deliver positive surprises and growth, even if the mobile-device market starts to slow down in 2016.

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Stocks Mentioned

Smith & Wesson Brands, Inc. Stock Quote
Smith & Wesson Brands, Inc.
SWBI
$13.13 (-4.72%) $0.65
Oxford Industries, Inc. Stock Quote
Oxford Industries, Inc.
OXM
$88.74 (-2.28%) $-2.07
Cognex Corporation Stock Quote
Cognex Corporation
CGNX
$42.52 (-3.28%) $-1.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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