This Just In: Upgrades and Downgrades – Olin Corporation (OLN), Smith & Wesson Holding Corporation (SWHC)

Page 1 of 2

At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and “initiating coverage at neutral.” Today, we’ll show you whether those bigwigs actually know what they’re talking about. To help, we’ve enlisted Motley Fool CAPS to track the long-term performance of Wall Street’s best and worst.

Shoot ‘em if you got ‘em — and if you can’t get ‘em, buy Olin
Ammunition maker Olin Corporation (NYSE:OLN) reported blockbuster earnings  earlier this week — not that anyone cared. In Q4, net income rose to $0.43 per share, or nearly twice the $0.23 Olin earned in last year’s Q4. Revenues were up a whopping 32%, to $588 million.

Olin Corporation (NYSE:OLN)

Much of these gains can be credited to the company’s Winchester-brand ammunition business. As CEO Joseph Rupp explained in the earnings release:

The Winchester business began to experience increased demand around the time of the election and the elevated level of demand continued through the balance of the year. Fourth quarter 2012 commercial volumes increased in excess of 20% compared to the fourth quarter of 2011.

What’s more, “commercial volumes in Winchester are expected to remain at elevated levels and as a result, first quarter 2013 earnings are forecast to significantly exceed first quarter 2012 earnings.” Indeed, Olin thinks it could earn as much as $0.45 in Q1.

Regardless, investors sold off the stock after earnings, purportedly in response to weak Chlor Alkali sales in the company’s chemicals business. But one analyst thinks that’s a mistake: Wells Fargo.

This morning, Wells Fargo announced  a sharp turn against the direction the herd is taking, and said it is upgrading Olin shares to “outperform.” Is it right to do so?

Gunmakers — holstered!
You’ve probably heard by now about the troubles weapons makers are experiencing. With a recent spate of gun violence having sparked calls for tightened regulation on gun sales in Congress, shares of Smith & Wesson Holding Corporation (NASDAQ:SWHC) and Sturm, Ruger & Company (NYSE:RGR) — the only two publicly-traded gunsmiths in the U.S. — are on the ropes.

Trading today for valuations of just 10.4 and 16.4 times earnings, respectively, both stocks look like incredible bargains if they can grow earnings at anywhere near the 30% annual, compounded rate analysts are projecting (for S&W, at least). Ruger estimates are hard to come by, but the company has already posted 75% annualized profits gains across the last five years, according to Yahoo! Finance).

But could Olin stock offer an even more compelling value?

All’s Wells with Olin
Just this morning, news began leaking out about a less-than-widely publicized  move that Wal-Mart Stores, Inc. (NYSE:WMT) is making — a mandate that customers at its stores will be allowed to purchase no more than three boxes of ammunition per customer, per day. That will cut into company revenues, no doubt — but it can’t be helped. According to a company spokeswoman, ammo is in exceedingly short supply right now. Visit any local sporting goods store today, and you’re likely to find the shelves bone dry of dry powder. Search the Internet, and pretty much any discount ammunition supplier you can name is fresh out … of everything.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!