American Outdoor Brands, Corp.: A Bet on Management

I found¬†what I believe to be an excellent company with owner-centric management while searching for an undervalued investment idea. American Outdoor Brands, Corp. (AOBC) is the holding company for world famous brands such as Smith & Wesson, Crimson Trace, and Thompson Centerfire, among others. Now there is a chance that I lost many of you as soon as you saw the mention of Smith & Wesson. Many of us, whether we know it or not, have positions in defense-related names such as Lockheed Martin, Boeing, Northrup Grumman. American Outdoor Brands is not different. Before we start throwing stones, let’s take off our judges robes and examine this company for what they are accomplishing as a business:

  • Growth Numbers CAGR from 2011-2016:
    • Revenue: 16%
    • Operating Cash Flow: 34%
    • Free Cash Flow: 51%
    • Net Income: 56%
    • Book Value: 22%
    • Shares Outstanding: -2.6%
    • Gross Margin: 30.6% to 40.6%
    • Operating Margin: 5.2% to 21.9%

I wasn’t sure if I was seeing things so I dove head first into the annual reports going back to 2009 and what I found was impressive. Keep reading…

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