What Happened?
Shares of american firearms manufacturer Smith & Wesson (NASDAQ:SWBI) jumped 7.7% in the morning session after the company reported better-than-expected second-quarter 2025 results that surpassed analyst expectations for both revenue and earnings. The firearms manufacturer posted revenue of $85.08 million, a 3.7% year-on-year decline but ahead of the consensus forecast of $79.23 million.
Similarly, its adjusted loss of $0.08 per share was narrower than the analyst estimate of a $0.12 loss. Highlighting the quarter's outperformance, adjusted EBITDA came in at $8.05 million, significantly beating Wall Street’s estimates of $3.59 million. The positive investor reaction was likely driven by the strong beats on key metrics, even as the company's operating margin contracted compared to the same period last year.
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What Is The Market Telling Us
Smith & Wesson’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 20.5% on the news that the company reported disappointing third quarter results. Its revenue, EPS, and EBITDA fell short of Wall Street's estimates.
Management attributed the shortfall to a normalization in firearm demand, largely driven by inflationary pressures. They also observed heightened consumer caution around discretionary spending, which was more pronounced in the second quarter than previously anticipated. Given the soft demand trends, the company lowered its sales outlook for the next quarter and the second half of the fiscal year. Overall, this quarter could have been better.
Smith & Wesson is down 11.6% since the beginning of the year, and at $8.83 per share, it is trading 37.8% below its 52-week high of $14.19 from September 2024. Investors who bought $1,000 worth of Smith & Wesson’s shares 5 years ago would now be looking at an investment worth $508.65.
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