American firearms manufacturer Smith & Wesson (NASDAQ: SWBI) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 11.6% year on year to $140.8 million. Its non-GAAP profit of $0.20 per share was 13% below analysts’ consensus estimates.

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Company Overview

With a history dating back to 1852, Smith & Wesson (NASDAQ: SWBI) is a firearms manufacturer known for its handguns and rifles.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Smith & Wesson’s demand was weak and its revenue declined by 2.2% per year. This wasn’t a great result and suggests it’s a low quality business.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Smith & Wesson’s revenue over the last two years was flat, sugggesting its demand was weak but stabilized after its initial drop.

This quarter, Smith & Wesson missed Wall Street’s estimates and reported a rather uninspiring 11.6% year-on-year revenue decline, generating $140.8 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 4.5% over the next 12 months. While this projection indicates its newer products and services will catalyze better top-line performance, it is still below the sector average.

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Operating Margin

Smith & Wesson’s operating margin has shrunk over the last 12 months and averaged 7.5% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.

In Q1, Smith & Wesson generated an operating margin profit margin of 9.3%, down 6.6 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Smith & Wesson, its EPS declined by 17.7% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

In Q1, Smith & Wesson reported EPS at $0.20, down from $0.45 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Smith & Wesson to perform poorly. Analysts forecast its full-year EPS of $0.31 will hit $0.45.

Key Takeaways from Smith & Wesson’s Q1 Results

We struggled to find many positives in these results as its revenue, EPS, and EBITDA fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 12.4% to $9.54 immediately following the results.

The latest quarter from Smith & Wesson’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.