Once cyclical - as the life of a firearm can easily span several decades - sales have tended over the last fifteen years to follow a steady growth trajectory.

The two real triggers were the repeal of the Federal Assault Ban - which in theory restricts the sale of AR-15 assault rifles - and a progressive political trend increasingly hostile to the free circulation of weapons.

Recent mass killings have, of course, rekindled the debate, but the subject remains sensitive because it is constitutional, and emblematic of the sanctity of individual freedoms in the USA.

Like Ruger & Company, Smith & Wesson has concentrated its activities on the design of handguns and shoulder arms, divesting its less lucrative activities - textiles, etc. - and concentrating its strategy on the allocation of resources. - and concentrating its capital allocation strategy on remunerating shareholders through dividends and share buy-backs.

This move was prompted by the setbacks in a sector that has seen a multitude of bankruptcies, as well as by the poor performance of Remington - controlled by private equity firm Cerberus - which had opted for an ineffective consolidation strategy.

Like Ruger, Smith & Wesson has quadrupled its sales over the last fifteen years. On the other hand, its profitability, financial position and inventory turnover are not as good as those of Ruger. Historically, S&W's management has clearly been less inspired than Ruger's, although the company has now set about correcting this.

Last year, at $15 a share and on an enterprise value basis of $630 million, Smith & Wesson was trading at x3 its realized profit in 2021. Surprising on the surface, but this was due to an exceptional 2021 financial year, since sales during the pandemic were twice as high as the average for previous years, which were already exceptional.

The market was therefore anticipating a severe correction, and on this occasion it was not mistaken. In the light of the results published last night, by 2023, Smith & Wesson's sales had fallen by 44%, while profits had been divided by five.

A reminder to investors interested in cyclical sectors or activities: it's essential to always try to normalize sales and profits, so as not to be hypnotized by performances that are sometimes out of the ordinary, and inevitably one-off in nature.