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Are Investors Undervaluing Smith & Wesson (SWBI) Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Smith & Wesson (SWBI - Free Report) . SWBI is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.

We should also highlight that SWBI has a P/B ratio of 4.32. 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. SWBI's current P/B looks attractive when compared to its industry's average P/B of 8.52. SWBI's P/B has been as high as 5.55 and as low as 1.36, with a median of 3.81, over the past year.

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 1.03. This compares to its industry's average P/S of 2.05.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Smith & Wesson is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SWBI feels like a great value stock at the moment.


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