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Smith & Wesson Brands (SWBI - Free Report) 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.
Former Bull Of The Day
Before I get too deep into this Bull Of The Day article, I want to mention that I wrote SWBI as the Bull on May 10. That was well before the most recent earnings report and I want to show how things have changed since the most recent report.
Clearly there was a big beat… and maybe those of you that are new the Bull Of The Day will see that as much as this article is about the beat it is also a tool to learn how the Zacks Rank works. It can also help you find great stocks that have the potential to outperform.
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 most recent quarter saw the company report EPS of $1.71 when $1.07 was expected. The $0.64 beat translates into a positive earnings surprise of 59%.
The average positive earnings surprise over the last fours quarters works out to be 58%, 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 $1.00 0 to $1.26.
Next quarter is jumped from $0.81 to $1.05.
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 2022 moving from $2.20 to $4.40 over the last 30 days.
The 2023 number has moved from $1.63 to $2.71 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 38% topline growth in the most recent quarter and analysts are calling for more of the same. That wrapped up a strong growth year, but now we are in a new fiscal year and the expectations have changed quite a bit. The top line is expected on contract, not grow, but18% this year and 28% next year. Something like that, if Wall Street were to believe those estimates, would send the valuation much lower.
We do see the forward earnings multiple shrinking from 9x to 7x over the last month… but before we cast judgement, let’s look at the other metrics as well. Price to book of 6x is more than the 4.6x level it was at last time I wrote about SWBI. Price to sales has also moved higher to 1.3x from 1x since I wrote on the company.
If you believe that people are not looking to buy guns… then this isn’t a stock for you. That said, many and ammunition name like Ammo Inc (POWW) would be something you might be interested in. As for me, I believe the growth estimates aren’t set in stone and demand for guns is still rather high.
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Bull Of The Day: Smith & Wesson Brands (SWBI)
Smith & Wesson Brands (SWBI - Free Report) 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.
Former Bull Of The Day
Before I get too deep into this Bull Of The Day article, I want to mention that I wrote SWBI as the Bull on May 10. That was well before the most recent earnings report and I want to show how things have changed since the most recent report.
Clearly there was a big beat… and maybe those of you that are new the Bull Of The Day will see that as much as this article is about the beat it is also a tool to learn how the Zacks Rank works. It can also help you find great stocks that have the potential to outperform.
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 most recent quarter saw the company report EPS of $1.71 when $1.07 was expected. The $0.64 beat translates into a positive earnings surprise of 59%.
The average positive earnings surprise over the last fours quarters works out to be 58%, 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 $1.00 0 to $1.26.
Next quarter is jumped from $0.81 to $1.05.
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 2022 moving from $2.20 to $4.40 over the last 30 days.
The 2023 number has moved from $1.63 to $2.71 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 38% topline growth in the most recent quarter and analysts are calling for more of the same. That wrapped up a strong growth year, but now we are in a new fiscal year and the expectations have changed quite a bit. The top line is expected on contract, not grow, but18% this year and 28% next year. Something like that, if Wall Street were to believe those estimates, would send the valuation much lower.
We do see the forward earnings multiple shrinking from 9x to 7x over the last month… but before we cast judgement, let’s look at the other metrics as well. Price to book of 6x is more than the 4.6x level it was at last time I wrote about SWBI. Price to sales has also moved higher to 1.3x from 1x since I wrote on the company.
If you believe that people are not looking to buy guns… then this isn’t a stock for you. That said, many and ammunition name like Ammo Inc (POWW) would be something you might be interested in. As for me, I believe the growth estimates aren’t set in stone and demand for guns is still rather high.
Chart
Smith & Wesson Brands, Inc. Price and Consensus
Smith & Wesson Brands, Inc. price-consensus-chart | Smith & Wesson Brands, Inc. Quote
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>