Why Ammo Maker Vista Outdoor Earnings Have Shot Down the Share Price

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Vista Outdoor Inc. (NYSE: VSTO) reported fiscal fourth-quarter and 2018 results before markets opened Tuesday. The ammunition and outdoor products company posted an adjusted diluted loss per share of $0.22 on revenues of $571 million. In the same quarter a year ago, Vista reported earnings per share (EPS) of $0.03 on revenues of $578.75 million. The consensus estimates for the quarter had called for a loss of $0.13 per share and $519.53 million in revenue.

For the full year, Vista reported revenues of $2.31 billion, compared to $2.55 billion in the prior year. EPS totaled $0.50, compared to $1.90 in fiscal year 2017. Analysts had been looking for EPS of $0.58 and revenues of $2.26 billion.

The company has completed a strategic review of its operations begun last November and now intends to focus on achieving growth through its leading brands in ammunition, hunting and shooting accessories, hydration bottles and packs, and outdoor cooking products. The company also plans to explore “strategic options” for its other product categories including its remaining Sports Protection brands (e.g. Bell, Giro and Blackburn), Jimmy Styks paddle boards, and Savage and Stevens firearms.

CEO Chris Metz said:

This transformation plan is a significant first step toward creating a portfolio of brands that is laser-focused on our target consumer and leverages the strengths of our combined platform. This renewed focus will allow us to invest in these categories and their natural adjacencies. Coupled with our previously announced sales and marketing reorganization to drive a founder’s mentality back into our brands, this strategic orientation will also allow us to accelerate our efforts to expand e-commerce capabilities and increase our emphasis on market-leading product innovation. The end result will be a Vista Outdoor that lives up to the potential envisioned three years ago when the company was formed. We intend to begin the portfolio reshaping immediately, and anticipate executing any strategic alternatives by the end of Fiscal Year 2020.

For fiscal 2019, Vista guided revenues to a range of $2.21 billion to $2.27 billion and EPS of $0.10 to $0.30. Analysts have estimated full-year EPS at $0.87 and revenues at $2.27 billion. For the first quarter of the new fiscal year, analysts are looking for EPS of $0.19 and sales of $546.28 billion. The company did not provide second-quarter guidance.

Sales fell 9% in the year due to lower volumes across all ammunition categories, lower pricing and lower firearms sales. Shooting-related categories in the outdoor products division were also down.

The stock traded down around 13% just after Tuesday’s opening bell at $14.55, in a 52-week range of $12.36 to $25.07. The consensus 12-month price target was $15.88 before results were announced this morning.

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