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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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Smith & Wesson (SWBI - Free Report) . SWBI is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

Another valuation metric that we should highlight is SWBI's P/B ratio of 6.94. 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 7.61. Over the past 12 months, SWBI's P/B has been as high as 6.94 and as low as 1.94, with a median of 3.96.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SWBI has a P/S ratio of 1.53. This compares to its industry's average P/S of 2.05.

Value investors will likely look at more than just these metrics, but the above data helps show that Smith & Wesson is likely undervalued currently. And when considering the strength of its earnings outlook, SWBI sticks out at as one of the market's strongest value stocks.


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