Smith Wesson 2026 Q2 Earnings Net Income Plummets 57.8% Amid Revenue Decline

Smith & Wesson (SWBI) reported Q2 2026 earnings that fell short of prior-year performance, with both revenue and profitability contracting. The company’s results beat revenue estimates by $0.94M and EPS by $0.02, but guidance for Q3 signaled cautious optimism. Management highlighted inventory reductions and new product momentum, though long-term growth remains constrained by market dynamics.

Revenue

Smith & Wesson’s total revenue for Q2 2026 declined 3.9% year-over-year to $124.67 million, driven by lower demand in long guns and other products. Handguns remained the company’s strongest segment, contributing $90.77 million, while long guns and other products accounted for $24.68 million and $9.22 million, respectively. The sequential reduction in inventory by 5% and year-over-year decline of 15% underscored disciplined operations, though overall sales growth remains under pressure.

Earnings/Net Income

The company’s net income plummeted 57.8% to $1.92 million in Q2 2026, with EPS falling 60% to $0.04. This sharp decline reflects reduced gross margins and higher operating expenses, despite improved cash flow. The earnings performance highlights a challenging operating environment, with profitability metrics lagging behind industry benchmarks.

Post-Earnings Price Action Review

The strategy of buying Smith & Wesson (SWBI) 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 was 9.34%, trailing the benchmark by 43.72%. With a maximum drawdown of 0.00% and a Sharpe ratio of 0.36, the strategy had minimal risk but lacked significant growth potential.

CEO Commentary

Mark Smith emphasized operational efficiency, noting $15M EBITDAS on $125M net sales and a 40% contribution from new products. He highlighted a 7.7% sequential rise in handgun sell-through after adjusting for inventory and a 3.5% YoY increase in average selling prices. Strategic priorities included the Smith & Wesson Academy’s success and disciplined capital allocation, with leadership expressing optimism about market positioning.

Guidance

Management provided Q3 guidance for 8–10% YoY sales growth, driven by higher absorption and new product launches. Q4 is expected to show “high single-digit to low double-digit” growth, with CAPEX of $25–30M for the year. Gross margins are anticipated to improve sequentially and year-over-year, though operating expenses will rise due to SHOT Show costs.

Additional News

1. Dividend Authorization: Smith & Wesson announced a $0.13 per share quarterly dividend, payable January 2, 2026, reflecting confidence in capital returns.

2. Smith & Wesson Academy Launch: The academy, which opened in September 2025, received “overwhelmingly positive” feedback, expanding training offerings for law enforcement and civilians.

3. CAPEX Allocation: The company plans $25–30M in capital expenditures for 2026, focusing on production capacity and innovation pipeline development.

Article Polishing

Smith & Wesson’s Q2 earnings underscored a mixed performance, with operational efficiency offset by broader market headwinds. While new product launches and inventory discipline generated cash flow, the revenue decline and margin compression highlight ongoing challenges. The company’s focus on innovation and capital allocation remains central to its strategic outlook.