American Outdoor Brands Corporation (NASDAQ:AOBC) announced that its firearm business, Smith & Wesson Corp., has entered into an agreement to acquire Gemini Technologies, Incorporated ("Gemtech"), a provider of high quality suppressors and accessories for consumer, law enforcement and military markets.
The company was silent about the value and expects to complete the acquisition by summer. It also intends to utilize its existing cash in hand to fund the buyout.
Benefits from the Acquisition
This acquisition will enable Smith & Wesson to reap the benefits of Gemtech’s ability to produce the finest rifle and pistol suppressors. Moreover, the strong product improvement capabilities of Gemtech will be equally profitable.
Smith & Wesson delivers innovative pistols, revolvers, rifles and accessories to its customers and this buyout will help the company enter the suppressor category. It will also help the company to expand its product offering and gel well with its long-term growth strategy.
Long-Term Plans
Smith & Wesson Corp. changed its name to American Outdoor Brands Corporation, effective Jan 1, 2017. The company is expanding its operation through strategic acquisitions and new product offerings. In its firearm business, the company aims to add new M&P pistols in fiscal 2018 and beyond.
We believe the policy of the company to focus on organic growth and make strategic acquisitions, like the UST Brands buyout in Nov, 2016, will help in strengthening the operation of the company.
Price Movement
American Outdoor Brands Corporation returned 3.3% in the last three months compared with the Zacks categorized Aerospace- Defense Equipment industry’s gain of 8.4%.
The company has provided an average positive earnings surprise of 28.21% in the last four quarters. We expect its expanded product offering to help it hold its strong position.
Zacks Rank & Stocks to Consider
American Outdoor Brands Corporation currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Raytheon Company (NYSE:RTN) , Heico Corporation (NYSE:HEI) and Curtiss-Wright Corporation (NYSE:CW) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Raytheon delivered average positive earnings surprise of 5.16% in the last four quarters. Its 2017 earnings estimates moved up 1.36% to $7.48 over the last 90 days.
Heico Corporation delivered average positive earnings surprise of 5.76% in the last four quarters. Its fiscal 2017 earnings estimates moved up 1.47% to $2.07 over the last 90 days.
Curtiss-Wright Corporation delivered average positive earnings surprise of 5.11% in the last four quarters. Its 2017 earnings estimates moved up 1.36% to $4.48 over the last 90 days.
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