American Outdoor Brand Corp AOBC NASD Smith Wesson

American Outdoor Brand Corp. AOBC; NASD

Smith & Wesson Holding Corp. SWHC; NASD

AOBC - Quick Background • Formerly Smith & Wesson Holding Corp. • (As of Jan. 2017; S&W Still exists, just as a subsidiary) • AOBC Founded in 2002 (U. S Based) • SWHC founded in 1852, Mass. • One of oldest manufacturers of firearms in the U. S • Specializes in Firearms and Accessories • Sells its products under various (18) brands, primarily: • Smith & Wesson • M&P • Thomson/Center Arms

Sufficient Market Potential? • (2015) The top two players of the global sporting guns market, controlling 70% • Smith & Wesson • Strum, Rugner & Co. (RGR) • Market expectations, USD 2. 3 bn in 2024, from USD 1. 6 bn 2015 • 3. 9% expected CAGR • Increase is due to: • Increased awareness of competitive shooting (Olympics, etc. ) • Growing popularity of shooting events Data From: http: //www. transparencymarketresearch. com/pressrelease/sports-gun-market. htm

SWHC; Expanding Markets • In addition to name change, SWHC has transitioned into the Extreme Outdoors Market; • 2014: Purchased Battenfield Tech. • Acquired suppliers: Taylor Brands, Crimson Chase [1] • Ex. Out. market estimated between USD 45 -60 bn. • Directly Competes With: • • Strum, Ruger & Co. (RGR) TASER Int. (TASR) Vista Outdoors (VSTO) National Presto Industries (NPK)

Advantages vs Competition • vs TASR: • Valuation advantage / More established *Data as of Dec, 2016 [2] • AOBC trades at: • 9* trailing earnings • 10* 2017 estimates • 7* FCF • TASR trades at: • 79 * te. • 48* 2017 est. • 35* FCF • vs RGR: • AOBC is diversified • Production opportunities • vs VSTO: • AOBC has higher profitability • VSTO is going through a HUGE lawsuit (-20% SMA 20, -50& SMA 200) • vs NPK • Only in sector due to production of ammo (not much of competition)

Disadvantages vs Competition • TASR (Future SA): • Shifting business from stun guns towards body cameras and evidence-management software • Axion (body cameras and EMS div. ) experiencing large initial growth • TASER is also looking towards expanding markets • RGR: • Strong if firearms market remains consistent • Cheaper valuation + dividends • (If sales decrease, AOBC will have advantage) • VSTO: • Larger exposure to the Outdoors market • NPK (Future SA) • Diversified in kitchen appliances • However, 86% GP from defense contracting [3] • AMTEC div. is worlds largest supplier of 40 mm ammo

Management Team • Brian Murphy – New president of Outdoor Rec. Division [4] • Former VP of Corp. Development For VSTO • SGB 40 under 40 Honoree • VSTO stock declined 40% during his time • However, under his leadership Corp. Dev. purchased more than USD 900 m worth of corporate acquisitions (ex. Camel. Bak)

Employee Relations • “Very well relaxed assembly area would highly recommend the company for anyone looking for a proper job/career, I also enjoyed working at the company due to the fellow employees that were very relaxed and management that was also very easy to get a long with and understanding. ” – Revolver Assembler [5] • “A typical night at Smith & Wesson is a lot of racking parts to then load them into furnaces set up the computer program to run the furnace, tempering the parts and checking the hardness. I have learned a lot about different metals and materials and how to use unique machinery, the management in the company so far everyone i have incountered seems to be genuine and effective. I get along well with my co-workers witch always makes getting through the night much easier. I find the hardest part of my job is the summers can be really hot in the department, (HEAT TREAT) the department can get well above 100 degrees. The most enjoyable part of the job is working in a place that has so much american history in it, it is amazing to me” – Heat Treat Operator [5]

Stock Information • P/E = 7. 88* • Stock price has depreciated while earnings have increased • Zacks also classifies Industry P/E at ~ 20 = Potential bargain • PEG =. 53* • Industry Average = 1. 84 • ROA(ttm) = 20. 90%* • ROE(ttm) = 41. 8* • Debt/Eq =. 52* • LTD/Eq =. 50* *data from finviz

DCF Information • Beta =. 70 • Calculated Revenue Growth: • 5 Year Direct CAGR = 16. 13% • 5 Year Multiple Period ‘Super’ CAGR = 13. 27% • ROIC = 11. 69%

Works Cited • https: //www. fool. com/investing/2016/12/22/better-buy-smith-wessonholding-corporation-vs-tas. aspx [1] • https: //www. fool. com/investing/2016/12/22/better-buy-smith-wessonholding-corporation-vs-tas. aspx [2] • https: //www. fool. com/investing/2016/12/24/forget-smith-wesson-holding -corp-these-2 -stocks-3. aspx? source=yahoo-2 news&utm_campaign=article&utm_medium=feed&utm_source=yahoo-2 news&yptr=yahoo [3] • http: //www. prnewswire. com/news-releases/american-outdoor-brandscorporation-creates-new-outdoor-recreation-division-300384989. html [4] • https: //www. indeed. com/cmp/Smith-&-Wesson/reviews [5]