The past five years haven’t just been good for Smith & Wesson—they’ve been great. Sales are booming, and so too is the company’s stock, which jumped a whopping 210 percent from August 2010 to August 2011. And for the first quarter of 2012, the arms maker reported a 48-percent increase in sales and a backlog of orders valued at approximately $392 million—for a time, Smith & Wesson actually couldn’t make guns quickly enough to meet demand.
How has the company managed to so greatly exceed expectations? America’s increased interest in guns for concealed carry and home defense has certainly helped. Ditto for recent sales spikes fueled by gun-control fears. The 2008 election of Barack Obama drove a firearms and ammo boom, and Obama’s November 2012 reelection is credited with literally boosting Smith & Wesson’s stock (Ruger’s too) and setting a Black Friday gun sales record.
However, while firearms sales are up across the board, S&W has done disproportionately well among arms makers. Why? Arguably because the company pulled out an old-fashioned trick: offering consumers products they want. From M&P pistols and semi-auto rifles to classic revolver models, S&W firearms have sold well.
Not everyone thinks the trend will continue, though. In August, KeyBanc Capital Markets downgraded Smith & Wesson’s stock by 9 percent to $8.90. KeyBanc argued that the firearms market can’t maintain the current rate of sales and therefore, according to KeyBanc, S&W’s stock was artificially high. But given that Smith & Wesson’s stock has since rebounded to $10.48 and overall gun sales are projected to remain high through at least early 2013, was KeyBanc misguided in that assessment? Will Smith & Wesson see continued growth in the coming year? Much of that depends on the success of its new introductions. Here’s what’s new from Smith & Wesson: