Gun Shares Increase in U.S. Following Strong Earnings at Smith & Wesson
Shares of makers of firearms surged Thursday after a strong financial report for the quarter by Smith & Wesson Holding Corp, adding to this week’s earlier gains following the shooting at the Orlando, Florida nightclub that killed 49 people.
In a reaction by the stock market that has become a familiar thing following mass shootings, Smith & Wesson shares along with those of Sturm Ruger & Co a rival surged by up to 11% Monday.
Shootings that are high profile such as the Orlando, Florida one increase fears over crime, which leads a significant number of people to purchase guns.
Others purchase them due to worrying the laws in the U.S. of gun control will become stricter. The two spur on more sales for makers of guns and strengthen their appeal to investors.
On Thursday, following the closing bell, Smith & Wesson posted results for its fourth quarter that beat expectations on Wall Street. The firearms maker also posted a forecast for revenue for its 2017 fiscal year that pleased investors.
Shares of Smith & Wesson increased by 7% in Thursday extended trading and Ruger’s shares were up 4%.
Smith & Wesson shares have increased by more than 40% over the last year, in part due to mass shootings, including last December’s in San Bernardino that brought out calls for more gun control.
The United State Senate inched nearer to scheduling a vote on measures of limited gun control Thursday, with the Democrats challenging the Republicans to defy the gun lobby and to vote for more restrictions.
Ruger said last February that it expected an increase in demand for firearms if the presidential election is won by a Democrat in November and becomes positioned to make an appointment of a new justice on the Supreme Court.
The revenue forecast for Smith & Wesson did not include any possible surge in the demand for firearms caused by those consumers worried about gun control increasing, CFO Jeff Buchanan said via his conference call with analysts.
Even as members of Congress and presidential hopefuls debate measures on gun control, investors worry a surge for the past year in sales of firearms could be losing its steam.
Background checks by the FBI, which give indications of how strong or weak gun sales are in the U.S., were up 1.1% during May from the same month in 2015.
That shows it remains tough trying to top the strong growth in sales for gun makers last year.