A market analyst and financial writer said Friday the longevity of Smith & Wesson makes American Outdoor Brands stock worth holding onto for the next half century.
“The stock has jumped 25 percent over the last three months as Wall Street begins to realize it was wrong about a so-called Trump slump,” said Rich Duprey, a writer for the investment website The Motley Fool, in an article published Friday. “But with shares still deeply discounted, buying now will reward investors many times over 50 years from now.”
Duprey predicts although its share of gun revenue for American Outdoor Brands will dwindle as the company diversifies to include shooting sports and other aspects of “the rugged outdoors market,” the gun industry’s growth will not likewise fade.
“Political issues have a bearing on the timing of a purchase, but not on the continuing demand for guns,” he said. “That’s key because firearms sales remain on an upswing, and American Outdoor Brands is a cheap stock. It continues to trade at just 10 times earnings, 14 times next year’s estimates, at just a fraction of its expected earnings growth rate, and at a bargain-basement eight times free cash flow.”
Duprey cited a recent report from the National Shooting Sports Foundation that found target shooting participation increased 44 percent between 2009 and 2016 — proof that the sport appeals to a broader and broader demographic as time passes.
“New shooters are younger, are more female and increasingly diverse in ethnicity,” Larry Keane, NSSF’s general counsel, said in a blog post earlier this month. “The shooting sports are affordable, accessible, and more inclusive than ever before and people are taking full advantage. Even if the industry has room to become more welcoming and inclusive, our customer base is changing along with the American population. They are buying firearms and going to the range. All are welcome.”
The Federal Bureau of Investigation processed 1.8 million applications through the National Instant Criminal Background Check System last month. Guns.com estimates about 926,000 guns were sold — nearly 57,000 more than May 2016, the busiest on record.
It continues a trend first noticed in March and sustained in April, when estimated sales eclipsed the previous year by 4,400.