Smith & Wesson Brands logged a 0.69% change today, and is now trading at a price of $11.03 per share.
Smith & Wesson Brands, Inc. designs, manufactures and sells firearms worldwide. The small-cap Consumer Discretionary company has returned a 3.56% dividend yield over the last 12 months.
The Company Has an Irregular Stream of Positive Cash Flows:
| 2019-04-30 | 2020-04-30 | 2021-04-30 | 2022-04-30 | |
|---|---|---|---|---|
| Revenue (k) | $638,731 | $675,299 | $1,057,041 | $865,601 |
| Revenue Growth | n/a | 5.73% | 56.53% | -18.11% |
| Gross Margins | 22.9% | 24.54% | 42.48% | 43.27% |
| Gross Margins Growth | n/a | 7.16% | 73.11% | 1.86% |
| Operating Margins | 6.81% | 7.45% | 30.24% | 29.07% |
| Operating Margins Growth | n/a | 9.4% | 305.91% | -3.87% |
| Net Margins | 2.88% | -9.07% | 23.84% | 22.47% |
| Net Margins Growth | n/a | -414.93% | 362.84% | -5.75% |
| Earnings Per Share | $0.34 | -$1.11 | $5.05 | $4.27 |
| EPS Growth | n/a | -426.47% | 554.95% | -15.45% |
| Diluted Shares (MM) | 55 | 55 | 50 | 46 |
| Free Cash Flow (k) | $22,634 | $79,992 | $292,650 | $113,559 |
| FCF Growth | n/a | 253.42% | 265.85% | -61.2% |
| Capital Expenditures (k) | $34,465 | $14,744 | $22,684 | $24,255 |
| Net Debt / EBITDA | 1.68 | -2.42 | n/a | -0.42 |
Smith & Wesson Brands Is Undervalued at Today's Prices:
Smith & Wesson Brands has a trailing twelve month P/E ratio of 8.55 compared to the Consumer Discretionary sector's average of 22.33. The company doesn't issue forward earnings guidance, and the mean growth rate of its last 5 years of reported EPS is 26.5%. On this basis, the company's PEG ratio is 0.32. But we cannot assume that Smith & Wesson Brands's impressive past EPS growth rate is sustainable. It is more prudent to calculate the company's PEG ratio with the expected 5-year EPS growth rate of the entire market, which is 13.05%. This more cautious approach gives us a PEG ratio of 0.66,which still suggests that the company's shares are undervalued.
Furthermore, Smith & Wesson Brands is likely undervalued in terms of its equity because its P/B ratio is 1.698 compared to its sector average of 3.12. The company's shares are currently trading -39.02% below their Graham number, implying there is a margin of safety for the stock. The Graham number is calculated according to the formula:
√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 1.78 * 8.16) = $18.08
