Shares of Smith & Wesson Brands Inc. (SWBI, Financial) have experienced a notable decline, with the stock price falling by 9.62% to $9.96. This drop reflects the market's reaction to the company's disappointing third-quarter results.
Smith & Wesson reported a nearly 16% decrease in revenue compared to the previous year, which fell short of analysts' expectations. Despite the revenue miss, the earnings were roughly in line with projections. The company's operating margins were adversely impacted by the combination of lower sales and increased costs, leading to a negative free cash flow for the quarter.
In terms of valuation, Smith & Wesson (SWBI, Financial) displays a price-to-earnings (P/E) ratio of 15.32 and a price-to-book (P/B) ratio of 1.19, suggesting that the stock is trading relatively close to its book value. The company's market capitalization stands at approximately $438.27 million, while its enterprise value is around $602.87 million.
The GuruFocus Valuation page indicates that Smith & Wesson is considered "Modestly Undervalued" with a GF Value estimate of $12.14, offering potential upside from its current price. Furthermore, the Altman Z-Score of 4.21 suggests a strong financial position, and the Beneish M-Score of -2.62 indicates that the company is unlikely to be involved in financial manipulation.
Despite the challenges, Smith & Wesson's dividend yield is close to a 5-year high, providing some level of income attractiveness for investors. However, potential investors should be mindful of the company's negative free cash flow and the recent decline in revenue per share over the past three years.
Overall, while Smith & Wesson (SWBI, Financial) faces significant headwinds, its relatively low P/B ratio and dividend yield may still attract value-driven investors willing to take on the associated risks.
