Smith Wesson 2026 Q2 Earnings Net Income Plummets 57.8%

Smith & Wesson (SWBI) reported Q2 2026 earnings that beat revenue estimates by $0.94M and EPS expectations by $0.02, though net income and EPS both declined sharply. The company raised Q3 sales guidance to 8-10% growth, signaling cautious optimism for the back half of the fiscal year.

Revenue

Smith & Wesson’s total revenue fell 3.9% to $124.67 million in Q2 2026, driven by a 5.2% decline in handgun unit shipments and 10.9% drop in long gun shipments. Handguns remained the core revenue driver, contributing $90.77 million, while long guns accounted for $24.68 million. Other products and services added $9.22 million, though this segment saw a 14.1% year-over-year decline. New product introductions offset some of the weakness, representing 38.7% of total sales.

Earnings/Net Income

The company’s net income plummeted to $1.92 million in Q2 2026, a 57.8% decrease from $4.55 million in the prior-year period. Earnings per share (EPS) dropped 60.0% to $0.04, reflecting margin compression and lower production volumes. The decline underscores operational challenges despite improved inventory management and new product momentum.

Post-Earnings Price Action Review

The strategy of buying Smith & Wesson shares 30 days after its revenue-raising earnings report and holding for an additional 30 days delivered moderate returns but underperformed the market. The strategy’s CAGR of 9.34% trailed the benchmark by 43.72%, with a Sharpe ratio of 0.36 indicating minimal risk but limited growth potential. A maximum drawdown of 0.00% highlighted the strategy’s low volatility, though it failed to capitalize on long-term gains.

CEO Commentary

Mark Smith emphasized operational efficiency, inventory reduction ($183M, down from $203M), and new products driving 40% of sales. Handgun market share growth offset long gun seasonality, while ASPs rose 3.5% YoY. Strategic priorities include innovation, inventory optimization, and expanding the Smith & Wesson Academy, which hosted law enforcement and consumer training.

Guidance

Deana McPherson outlined Q3 guidance: sales growth of 8–10% above Q3 2025, with gross margin improvements from higher absorption and inventory optimization. Operating expenses are projected to rise 15% due to SHOT Show, promotions, and profit-sharing. Full-year CAPEX is estimated at $25–30M, including Academy investments. Tax rate guidance remains at ~28%.

Additional News

1. Dividend Authorization: Smith & Wesson’s board approved a $0.13 per share quarterly dividend, payable January 2, 2026.

2. Smith & Wesson Academy Launch: The academy’s grand opening in September 2025 bolstered training programs for law enforcement and consumers, enhancing brand engagement.

3. Inventory Optimization: Distributor inventory declined 5% sequentially and 15% YoY, positioning the company to respond swiftly to demand.