Smith Wesson 2025 Q4 Earnings Misses Targets as Net Income Declines 65%

Smith & Wesson (SWBI) reported its fiscal 2025 Q4 earnings on Jun 20th, 2025. The company’s financial performance fell short of market expectations, with significant declines in both revenue and earnings per share. The guidance for fiscal 2026 suggests continued challenges, with anticipated revenue declines and pressure on margins. Despite these obstacles, Smith & Wesson remains focused on innovation and cost management to navigate the difficult market conditions.

Revenue

The total revenue of Smith & Wesson decreased by 11.6% to $140.76 million in 2025 Q4, down from $159.15 million in 2024 Q4.

Earnings/Net Income

Smith & Wesson's EPS declined 63.9% to $0.22 in 2025 Q4 from $0.61 in 2024 Q4. Meanwhile, the company's net income declined to $9.73 million in 2025 Q4, down 65.1% from $27.86 million reported in 2024 Q4. The significant EPS drop indicates a challenging quarter for Smith & Wesson.

Price Action

The stock price of Smith & Wesson has dropped 7.18% during the latest trading day, has plummeted 18.38% during the most recent full trading week, and has tumbled 10.51% month-to-date.

Post-Earnings Price Action Review

The strategy of buying SWBI when revenues beat expectations and holding for 30 days resulted in poor performance. This approach yielded a return of -54.67%, significantly underperforming the benchmark return of 32.56%. With an excess return of -87.24% and a CAGR of -18.90%, the strategy did not capitalize on market gains. It also exhibited a high maximum drawdown of -65.51%, indicating significant downside risk. The Sharpe ratio of -0.57 highlights unfavorable risk-adjusted returns, emphasizing the strategy's inefficacy during the observed period. This performance underscores the challenges in predicting stock movements based on earnings surprises alone.

CEO Commentary

Mark Peter Smith, President and CEO, highlighted that the fourth quarter proved more challenging than anticipated due to macroeconomic and industry trends. He noted lower sales and production volumes impacted margins, but disciplined cost management partially offset these effects. New products accounted for 44% of sales, emphasizing the importance of innovation as a competitive differentiator. Smith expressed a cautious outlook, indicating that consumer demand remains soft due to economic pressures, though they maintain market share leadership. He mentioned that the company is well-positioned to navigate these challenges by focusing on cost control and a robust product pipeline.

Guidance

Looking ahead, Smith & Wesson expects fiscal 2026 demand for firearms to mirror fiscal 2025, influenced by economic headwinds such as inflation and tariffs. The first quarter is anticipated to see approximately a 10% revenue decline year-over-year, with margins under pressure due to promotions and rising costs. The company projects a sequential decrease in average selling prices of 5% to 10%. Operating expenses are expected to remain flat compared to the previous year, and the effective tax rate is anticipated to be around 30%.

Additional News

Smith & Wesson recently announced a quarterly dividend of $0.13 per share, payable on July 21, 2025, to shareholders of record as of July 7, 2025. This decision underscores the company’s commitment to returning value to shareholders despite recent financial challenges. Additionally, no major changes in the C-level management team were reported during this period. The company remains focused on maintaining its market position through continued investment in new product development, which aligns with its strategy to navigate economic headwinds and sustain its leadership in the firearms market.