Smith & Wesson Holding Corporation (SWHC) will release its second quarter fiscal 2015 financial results after the market closes on Dec 4. In the prior quarter, this leading firearm manufacturer reported a positive earnings surprise of 4.00%. Let’s see how things are shaping up at Smith & Wesson prior to this announcement.
Factors to Consider this Quarter
The latest consumer surge in firearm purchasing sent inventory levels higher among the firearm manufacturers. The rise in inventory in all product categories might hurt Smith & Wesson’s sales in the fiscal second quarter.
Summer months are historically soft for gun sales. This is especially true as gun buyers indulge in other outdoor recreational activities instead of shooting sports.
Earnings Whispers
Our proven model indicates that Smith & Wesson does not have the right combination of elements to secure an earnings beat. That is because a stock needs to have both a a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here.
Zacks ESP: This is because the Most Accurate estimate stands at 7 cents, in line with the Zacks Consensus Estimate, resulting in 0.00% ESP.
Zacks Rank: Smith & Wesson has a Zacks Rank #5 (Strong Sell).
We particularly caution against stocks with Zacks Ranks #4 and 5 going into the earnings season.
Other Stocks to Consider
Here are some defense operators worth considering on the basis of our model, which shows that they have the right combination of elements to post an earnings beat in the next quarter.
General Dynamics (GD) has an earnings ESP of +1.44% and a Zacks Rank #2 (Buy).
Northrop Grumman Corporation (NOC) has an earnings ESP of +0.91% and a Zacks Rank #3 (Hold).
Lockheed Martin Corporation (LMT) has an earnings ESP of +0.36% and a Zacks Rank #3.
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