Adm 4425 - Investments
Essay by Shawn Dickerson • September 15, 2017 • Term Paper • 3,289 Words (14 Pages) • 1,439 Views
ADM4425 - Investments | June 20 2017 |
Shawn Dickerson, 234870 | Final Report |
Table of Contents
Brief Overview of a Company 2
American Outdoor Brand Corp. (AOBC) 2
About AOBC 2
Threats to AOBC 3
Management of note for AOBC 3
Conclusion for AOBC 4
Important Economic and/or Market Event 4
After-the-course reflection 6
What I’d do differently 8
Moving Forward 9
Near future of investing for me 10
Appendix A 11
Brief Overview of a Company
American Outdoor Brand Corp. (AOBC)
About AOBC
Why some of us may not be familiar with this company is because they just went thru a rebranding of their organization. It was called Smith & Wesson Holding Corporation up until January of 2017. This company trades on the NASDAQ and is in the industry of Capital Goods. AOBC was founded in February 15, 2002 and is headquartered in Springfield, Massachusetts, United States.[1] AOBC has several popular consumer names in shooting, hunting and outdoors realm of consumer goods. They operate in two segments, one being firearms and the other being their outdoor products and accessories. For their firearms they have the world renowned Smith & Wesson guns brand and for accessories, keygear, OLD TIMER and Imperial knives, and for me a bit surprising were AEDs (automated defibrillators) under the Deep River Plastics name and they also sell hand cuffs under the Schrade name among other countless products.[2]
The firearms segment is their core business that accounts for most of their sales which increases 60% year over year. As for the accessories segment, this is their newest area that targets things like camping, hiking, fishing, paddling sports and is a smaller portion of the business with around $39 million in sales. This area has high gross margins hovering around 50%.2
The Smith & Wesson name has been around since 1852 which is an undisputed leader in the firearms industry where a one out of 2 revolver owner in the US is familiar with Smith & Wesson with half of the general population over 18 years of age knowing the brand and 9 of 10 handgun buyers are familiar with the name. [3] This gives AOBC a significant advantage in this industry a significant aid to their moat compared to their competitors. AOBC has been in the industry for long, under a parent company name, giving it a very strong brand. AOBC operates like an umbrella corporation of their diverse businesses. They all use the same back office administrative functions like accounting, human resources, legal into a centralized operation letting the divisions focus on what they do best, innovation and growth.[4] AOBC has a P/E valuation of margin of safety 13% with an analyst’s 5-year growth estimate of 15% along with having a beta of -0.36, meaning that the stock value tends to go down when the market goes up and vice versa, from Yahoo Finance.[5] AOBC doesn’t appear to be close to bankruptcy scoring an Altman Z score of 5.52 with a Piotrosky F score of 7 based on gurufocus.com’s analysis as of June 16, 2017. [6]
Threats to AOBC
As for threats to AOBC, they are threatened by legislation, though there is proposed Constitutional Concealed Carry Reciprocity Act that is being proposed by a US senator in Texas that proposes to the loosening of concealed carry laws.[7] This could prove to increase sales for gun sellers and manufacturers.
Gun sales have been sporadic before the election with Hilary Clinton threatening to change the way Americans deal with guns looking for more background checks and gun control reform which led to a surge on gun purchases in addition to random tragic events that created huge spikes with AOBC and their competitors.4
As for competitors in the Ordnance and Accessories industry are noted in Table #1:
Company name | Stock Price ($) | 52 Week High/Low ($) | P/E Ratio (current except for Vista) | Market Cap. |
American Outdoor Brands Corp. | 24.07 | 31.19/17.50 | 10.27 | 1.350B |
National Presto Industries, Inc. (NPK) | 102.90 | 112/81.38 | 16.09 | 719.1M |
Sturm, Ruger & Co., Inc. (RGR) | 63.00 | 78.09/47.15 | 13.73 | 1.11B |
TASER International, Inc. | 21.90 | 30.15/17.18 | 68.44 | 1.15B |
Vista Outdoor Inc. (VSTO) | 21.91 | 53.09/19.72 | -5.54 | 1.25B |
Table #1: http://www.nasdaq.com/symbol/aobc/competitors
Management of note for AOBC
Mr. Peter James Debney is the president and CTO since 2011 under the Smith & Wesson Holding Company name and now AOBC. Before his current position he was president of the firearms division from 2009-2011 for Smith & Wesson. Before Smith & Wesson he was the president of Presto Products Company for 3 years of New Zealand that is a plastic extrusion business that produced plastics for private label food contracts, trash bags and Industrial films, etc… where he was responsible for 7 direct reports and 1600 employees.[8]
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