For investors who might have been wondering about earnings, gunsmith Smith & Wesson (AMEX:SWB) released a statement last week affirming that its guidance was on the mark. Yet at the same time, it asked the Securities and Exchange Commission for more time to file its annual report: It needs the time to focus on the early adoption of employee stock option rules that it says will take a few pennies off of annual earnings.

The company has been enjoying a resurgent interest in its stock this year, as it rose from around $1 a share to more than $6 at Friday's close. Even as some pundits wondered whether it was time for investors to take profits, the market showed little sign of selling Smith & Wesson off. In particular, investors seem to like the fact that earnings for 2005 will be as much as 320% higher than last year, and that sales of "guns and butter" products -- specifically, um, guns -- will be up 11% year over year.

While earnings will be up, it remains to be seen whether the sales increase contributed the most to them, or, as fellow Fool contributor Rich Smith has reported, is it mostly Smith & Wesson's insurance company reimbursements for past (and future) litigation expenses. As Rich noted, most of Smith & Wesson's profits have come from that source since 2003. Indeed, last quarter, without the benefit of such income, profits evaporated and the company actually posted a $32,600 loss. In the future, its insurance company will reimburse the company half the cost of its litigation expenses.

By focusing on selling firearms, Smith & Wesson has experienced double-digit growth. That it has reorganized itself to maintain that focus should benefit investors in the future, though costs for consultants to implement the Six Sigma strategy recently reduced gross profits.

Yet owners' earnings -- the total of net income and depreciation reduced by capital spending and offset by one-time income or expenses -- have been steadily worsening, dropping to a $2.7 million loss in the third quarter from a $2.3 million loss in the second quarter. Smith & Wesson has not given any indication that these conditions are improving, and with the request for a filing extension, investors will have to wait a little longer to get the full picture.

While the stock has enjoyed a strong performance of late, the company still operates as if it were blindfolded during target practice. As only one of two publicly traded gunmakers -- the other is Sturm, Ruger & Co (NYSE:RGR) -- investors would be well-advised to remain wary of Smith & Wesson.

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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. The Motley Fool has a disclosure policy.