SPRINGFIELD, Mass. (AP) — Smith & Wesson plans to spend an additional $15 million buying back its own stock after watching shares get pummeled in the wake of the school shooting in Connecticut earlier this month.
Shares of gun makers have been on a tear all year long due to fears that President Barack Obama would push for new restrictions if he were re-elected.
Even with the sell-off after the Dec. 14 shooting in Newtown, Conn., shares of Smith & Wesson Holding Corp. are still worth nearly twice what they were at the start of the year. Shares rose 3 percent Thursday to $8.20.
Shares of Smith & Wesson closed at $7.96 Wednesday, down more than 16 percent from the day before the shooting.
However, the same fears of new gun restrictions have been heightened since the shooting, with Obama vowing to send Congress new policy proposals at the start of the year intended to reduce gun violence.
And Cowen & Co. last week published a report by analyst Cai von Rumohr, whose research suggested that gun sales had indeed picked up since the shooting.
Rumohr still downgraded the company, as well as rival Sturm, Ruger & Co., because of uncertainty over what shape new gun laws would take.
There remains some pressure on gun makers and it seems unlikely that they will near annual highs, which Smith & Wesson reached one week before the shooting that left 20 children and six school staff members dead.
The private equity firm Cerebus said after the shooting that it would sell its stake in the company that makes the Bushmaster semiautomatic rifle and sporting goods retailer Dick's suspended the sale of modern sporting rifles nationwide.
That has not shaken Smith & Wesson's view of the value of its own shares, however.
Earlier this month, the company approved plans to buy back $20 million of its shares as they reached their peak for the year. That buyback has already been completed. The company expects to fund this latest repurchase program using cash on hand and working capital.
In September, Smith & Wesson posted record earnings and its outlook went well beyond what Wall Street had been expecting.
Its shares surged 19 percent in after-hours trading on that day.