Bull Of The Day: Smith & Wesson Brands (SWBI)

·3 min read

Smith & Wesson Brands (SWBI) is a Zacks Rank #1 (Strong Buy) that has an A for the Value Style Score and an A for the Growth Style Score. As the aggressive growth stock strategist here at Zacks, I always lean to the growth side of things and when I see a strong growth score I know I am already on the right path. Let’s take a deeper look at this stock in this Bull of the Day article.

Description

Smith & Wesson Brands, Inc. designs, manufactures, and sells firearms worldwide. Smith & Wesson Brands, Inc. markets its products through independent dealers, retailers, in-store retails, and direct to consumers; print, broadcast, and digital advertising campaigns; social and electronic media; and in-store retail merchandising strategies. The company was formerly known as American Outdoor Brands Corporation and changed its name to Smith & Wesson Brands, Inc. in June 2020. Smith & Wesson Brands, Inc. was founded in 1852 and is based in Springfield, Massachusetts.

Earnings History

The first thing I do when I look at stock is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has been able to communicate to the market. A stock that consistently beats is one that has management communicating expectations to Wall Street that can be achieved. That is what you want to see.

For SWBI, I see good history of beating the Zacks Consensus Estimate. There are four beats over the last four quarters.

The average positive earnings surprise over the last fours quarters works out to be 48%, which means that they are posting results that are more than what is expected.

Earnings Estimates

The Zacks Rank tells us which stocks are seeing earnings estimates move higher. For SWBI, I see estimates moving higher.

This quarter has moved from $1.04 cents to $1.07 cents.

Next quarter is holding still at $1.00.

The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is even better for those numbers.

I see 2021 moving from $4.00 to $4.04 over the last 60 days.

The 2022 number has moved from $1.79 to $2.20 over the same time horizon.

Positive movement in earnings estimates like that are the reason that this stock is a Zacks Rank #1 (Strong Buy).

Valuation

Good growth is hard to find these days, buy SWBI has it. I see 54% topline growth in the most recent quarter and analysts are calling for more of the same. I see some pretty big estimates for growth for the rest of the year, analyst expect 392% this year and then some contraction next year. For this huge growth this year and concretion next year, investors are only paying 9x forward estimates. Price to book of 4.6x is a little more than where value investors would be interested, but at only 1.03x sales the valuation is still super solid.

Chart

Smith & Wesson Brands, Inc. Price and Consensus

Smith & Wesson Brands, Inc. Price and Consensus
Smith & Wesson Brands, Inc. Price and Consensus

Smith & Wesson Brands, Inc. price-consensus-chart | Smith & Wesson Brands, Inc. Quote

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