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Should Value Investors Buy Smith & Wesson (SWBI) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Smith & Wesson (SWBI - Free Report) is a stock many investors are watching right now. SWBI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Another notable valuation metric for SWBI is its P/B ratio of 4.22. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 7.52. Over the past year, SWBI's P/B has been as high as 5.55 and as low as 0.87, with a median of 3.10.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SWBI has a P/S ratio of 0.87. This compares to its industry's average P/S of 1.93.

These are only a few of the key metrics included in Smith & Wesson's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SWBI looks like an impressive value stock at the moment.


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