Smith Wesson 2026 Q2 Earnings Record Low Net Income Amid 57.8% Decline

Smith & Wesson (SWBI) reported mixed fiscal 2026 Q2 results, with revenue down 3.9% to $124.67 million but exceeding estimates by $0.94M. The company guided for 8-10% Q3 sales growth despite compressed margins and a 60% EPS drop.

Revenue

Smith & Wesson’s total revenue fell to $124.67 million in Q2 2026, a 3.9% decline from $129.68 million a year earlier. Handguns remained the primary driver, contributing $90.77 million, while long guns accounted for $24.68 million. Other products and services rounded out the total net sales at $9.22 million.

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. Earnings per share (EPS) also fell sharply to $0.04, a 60% drop from $0.10 in 2025 Q2, underscoring the challenges of margin compression and lower sales. This significant decline highlights the need for cost discipline and operational efficiency.

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, CEO, emphasized operational efficiency and innovation, noting $15 million in EBITDAS on $125 million in net sales. New products contributed 40% of sales, while average selling prices rose 3.5% year-over-year. The company also reduced inventory to $183 million, down from $203 million in Q1, and expressed optimism about the Smith & Wesson Academy’s growth potential.

Guidance

CFO Deana McPherson outlined Q3 2026 sales growth of 8–10% compared to Q3 2025, with gross margins expected to improve sequentially and year-over-year. For Q4, the company anticipates high single-digit to low double-digit sales growth, leveraging seasonality and strong demand. Capital spending for 2026 is targeted at $25–30 million.

Additional News

Smith & Wesson announced a quarterly dividend of $0.13 per share, implying a 5.8% yield, payable on January 2, 2026. The company also highlighted a 15% year-on-year reduction in distributor inventory, positioning itself to capitalize on holiday season demand. Additionally, the Smith & Wesson Academy’s early success was underscored, with positive feedback from law enforcement and consumer training classes.