Smith & Wesson Prices Senior Notes - Analyst Blog


Shutterstock photo

Leading firearm manufacturer Smith &Wesson Holding Corporation ( SWHC ) priced $75 million 5% senior notes due 2018. The notes are offered to qualified institutional buyers under private placement. The sale of the senior notes is expected to close by Jul 15, 2014. Notes are issued to investors at 100% of its principal amount.

Purpose of the New Issue

This firearm producer intends to utilize the net proceeds from the issue for general corporate purposes. These include vertical integration opportunities, capital investments, acquisitions and share buybacks.

Interest Expenses

Smith & Wesson exited fiscal 2014 with total interest expense of $12.6 million, up 112.1% year over year. The newly issued senior notes will increase the annual interest burden of the company by $3.75 million. We believe Smith & Wesson will easily meet the higher interest obligation given its present financial standing.

Road Ahead

Smith & Wesson has been a consistent performer and in that process outpaced the Zacks Consensus Estimate in the last four quarters with an average beat of 18.78%.

As per data from FBI's National Instant Criminal Background Check System ("NICS"), the number of background checks carried out on people seeking to buy firearms declined in February, March and April, from the year-earlier periods. This will mean a likely slump in gun sales at Smith & Wesson and its peers like Sturm, Ruger& Co. Inc. ( RGR ).

Over the last 30 days, the Zacks Consensus Estimate for fiscal 2015 decreased 4.5% to $1.34 per share as four estimates were revised downward during that period.

Zacks Rank

Smith & Wesson currently carries a Zacks Rank #3 (Hold). Investors interested in this space can consider stocks like Brunswick Corporation ( BC ) and Callaway Golf Co. ( ELY ).  Both these stocks carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

STURM RUGER&CO (RGR): Free Stock Analysis Report

BRUNSWICK CORP (BC): Free Stock Analysis Report

SMITH & WESSON (SWHC): Free Stock Analysis Report

CALLAWAY GOLF (ELY): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: RGR , BC , SWHC , ELY

More from


Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by