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Smith & Wesson Brands, Inc. (SWBI)
:SWBI

Smith & Wesson Brands (SWBI) AI Stock Analysis

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Smith & Wesson Brands

(NASDAQ:SWBI)

59Neutral
Smith & Wesson Brands has a strong balance sheet with no debt and a reasonable valuation, but it faces significant challenges with declining revenues and profitability. The bearish technical trend and cash flow issues add to the caution. Despite strong new product performance, the outlook remains tempered by negative financial trends and lower production margins.

Smith & Wesson Brands (SWBI) vs. S&P 500 (SPY)

Smith & Wesson Brands Business Overview & Revenue Model

Company DescriptionAmerican Outdoor Brands Corp. is a holding company, which engages in the manufacture, design, and provision of firearms. It operates through the Firearms and Outdoor Products & Accessories segments. The Firearms segment comprises the manufacture of handguns, long guns, handcuffs, suppressors, and other firearm-related products for sale to a wide variety of customers. The Outdoor Products & Accessories segment engages in the distribution, manufacture, and design of reloading, gunsmithing, and gun cleaning supplies; stainless-steel cutting tools and accessories; flashlights; tree saws and related trimming accessories; shooting supplies, rests, and other related accessories; apparel; vault accessories; laser grips and laser sights; and a full range of products for survival and emergency preparedness. The company was founded by Michell A. Saltz on June 17, 1991 and is headquartered in Springfield, MA.
How the Company Makes MoneySmith & Wesson Brands, Inc. generates revenue primarily through the sale of firearms and firearm-related accessories. The company's key revenue streams include handguns, such as revolvers and pistols, as well as long guns, which comprise rifles and shotguns. Additionally, Smith & Wesson offers a range of firearm accessories and branded merchandise. The company's earnings are significantly influenced by factors such as consumer demand, regulatory changes, and its ability to maintain a prominent position in the firearms market. Smith & Wesson also engages in partnerships and distribution agreements to extend its market reach, ensuring its products are available through various channels, including direct sales to law enforcement and military agencies, as well as through a network of dealers and retailers.

Smith & Wesson Brands Financial Statement Overview

Summary
Smith & Wesson Brands shows a stable financial structure with a robust balance sheet and zero debt. However, declining revenue and profitability trends in the income statement, along with challenges in cash generation, highlight areas for improvement.
Income Statement
65
Positive
Smith & Wesson Brands has shown fluctuating revenue trends, with a noticeable decline in recent years from its peak in 2021. The gross profit margin for TTM (Trailing-Twelve-Months) is approximately 29.65%, while the net profit margin stands at 6.05%, indicating moderate profitability. The EBIT and EBITDA margins are also modest at 7.00% and 11.82%, respectively, reflecting tight operational efficiencies. Overall, the income statement suggests stable but declining performance with room for improvement in operational margins.
Balance Sheet
75
Positive
The balance sheet of Smith & Wesson Brands shows a solid equity position with zero total debt in the latest TTM period, resulting in a healthy debt-to-equity ratio of 0. The return on equity (ROE) for TTM is 8.19%, demonstrating reasonable returns for shareholders. The equity ratio stands at 62.92%, highlighting a strong equity base compared to total assets. These metrics indicate a stable financial structure with low leverage and robust shareholder equity.
Cash Flow
50
Neutral
The cash flow statement reveals challenges in cash generation, with negative free cash flow of -$10.03 million in the latest TTM period. The operating cash flow to net income ratio is negative, indicating issues in converting income into cash. The free cash flow to net income ratio is also negative, reflecting cash flow pressures. The company has previously demonstrated positive cash flows, but recent periods suggest a need for better cash management strategies.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
493.05M535.83M479.24M864.13M1.06B678.39M
Gross Profit
146.19M158.09M154.54M374.56M448.98M234.71M
EBIT
34.52M44.78M48.41M251.65M319.63M49.93M
EBITDA
58.26M84.01M81.10M251.65M319.63M81.59M
Net Income Common Stockholders
29.80M39.61M36.88M194.49M252.05M-61.23M
Balance SheetCash, Cash Equivalents and Short-Term Investments
26.70M60.84M53.56M120.73M113.02M125.40M
Total Assets
578.86M578.00M541.29M497.48M446.39M728.96M
Total Debt
145.10M78.37M61.75M40.28M38.79M199.04M
Net Debt
118.39M17.53M8.20M-80.45M-74.23M73.65M
Total Liabilities
214.79M179.84M156.67M136.96M180.00M341.84M
Stockholders Equity
364.07M398.16M384.62M360.51M266.38M387.12M
Cash FlowFree Cash Flow
-10.03M15.79M-73.17M113.56M292.65M80.22M
Operating Cash Flow
-4.43M106.74M16.73M137.81M315.33M94.96M
Investing Cash Flow
-10.81M-81.49M-89.78M-24.12M-23.40M-13.96M
Financing Cash Flow
-5.42M-17.97M5.88M-105.99M-303.92M3.38M

Smith & Wesson Brands Technical Analysis

Technical Analysis Sentiment
Negative
Last Price9.82
Price Trends
50DMA
10.45
Negative
100DMA
11.42
Negative
200DMA
12.84
Negative
Market Momentum
MACD
-0.24
Positive
RSI
38.28
Neutral
STOCH
29.81
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SWBI, the sentiment is Negative. The current price of 9.82 is below the 20-day moving average (MA) of 10.57, below the 50-day MA of 10.45, and below the 200-day MA of 12.84, indicating a bearish trend. The MACD of -0.24 indicates Positive momentum. The RSI at 38.28 is Neutral, neither overbought nor oversold. The STOCH value of 29.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SWBI.

Smith & Wesson Brands Risk Analysis

Smith & Wesson Brands disclosed 33 risk factors in its most recent earnings report. Smith & Wesson Brands reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Smith & Wesson Brands Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
RGRGR
70
Outperform
$677.52M22.709.39%1.72%-1.49%-34.38%
MEMEC
65
Neutral
$290.17M11.3810.78%-1.16%227.49%
62
Neutral
$8.17B12.760.49%3.07%3.84%-16.79%
59
Neutral
$429.91M15.038.05%5.22%-5.77%14.45%
OLOLN
55
Neutral
$2.70B25.705.10%3.42%-4.29%-74.85%
46
Neutral
$173.38M-4.37%-14.06%-102.73%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SWBI
Smith & Wesson Brands
10.04
-6.84
-40.52%
OLN
Olin
23.80
-33.23
-58.27%
RGR
Sturm Ruger & Company
40.17
-5.21
-11.48%
MEC
Mayville Engineering Company
14.06
1.21
9.42%
POWW
AMMO
1.41
-1.09
-43.60%

Smith & Wesson Brands Earnings Call Summary

Earnings Call Date: Mar 6, 2025 | % Change Since: -10.89% | Next Earnings Date: Jun 19, 2025
Earnings Call Sentiment Neutral
Smith & Wesson displayed strong new product performance and effective inventory management, but faced significant challenges with overall revenue decline and lower margins. The sentiment is balanced between positive innovation and negative financial outcomes.
Highlights
Strong New Product Performance
New products introduced within the past year accounted for over 41% of sales in the quarter, indicating successful innovation and strong market reception.
Long Guns ASP Increase
Average Selling Prices (ASP) for long guns increased by 17.2% in Q3, driven by strong demand for higher-priced lever rifles.
Inventory Management Success
Channel inventory at distributors is very clean, currently at under nine weeks, ensuring a balanced supply chain.
Capital Return to Shareholders
Smith & Wesson returned more than $49 million to shareholders via stock repurchases and dividends over the past twelve months.
Lowlights
Overall Revenue Decline
Net sales for the third quarter were $115.9 million, down 15.7% compared to the prior year, mainly due to lower demand for core products and persistent inflation.
Handgun ASP Decline
Average Selling Prices (ASP) for handguns declined by 7.8%, reflecting strong demand for lower-priced products like the Bodyguard 2.0.
Reduced Production Margins
Gross margin fell to 24.1%, down 4.6% from the previous year, due to lower production volumes and higher promotional costs.
Lower Full-Year Revenue Projection
The company expects full-year revenue to decrease by 5-10% from fiscal 2024 levels, with Q4 projected to be down 2-5% from the prior year.
Company Guidance
During the Smith & Wesson Brands, Inc. Third Quarter Fiscal 2025 Financial Results Conference Call, the company provided several key metrics and guidance for the upcoming quarters. The top-line revenue for the third quarter was reported at $115.9 million, representing a 15.7% decline from the previous year. Despite this, the company maintained its EPS and EBITDA expectations through lower operating expenses and a flexible manufacturing model. New products accounted for over 41% of sales in the quarter, with the Bodyguard 2.0 driving demand in the handgun category despite a 7.8% decline in handgun ASPs. Long gun ASPs increased by 17.2%, driven by demand for higher-priced lever rifles. Adjusted NICS was down 4.5%, indicating a decrease in consumer firearm demand, yet the company noted a 20% compounded annual growth rate in long gun unit sales over two years. Operating expenses were $23.8 million, reduced by $4.3 million from the prior year, and the company ended the quarter with net income of $1.7 million or $0.04 per share. Smith & Wesson expects full-year revenue to decline by 5-10% compared to fiscal 2024, with the fourth quarter projected to see a 2-5% reduction from the prior year. The company also highlighted a strong balance sheet, plans for additional share repurchases, and a $0.13 quarterly dividend.

Smith & Wesson Brands Corporate Events

Executive/Board Changes
Smith & Wesson Announces VP Sales Retirement
Neutral
Jan 17, 2025

Smith & Wesson Brands, Inc. announced the upcoming retirement of Sue Cupero, the Vice President of Sales, who will retire in May 2025 after more than four decades of service. Cupero has been instrumental in shaping sales strategies and building market presence, and her departure will mark the end of an era at the company. The search for her successor will begin immediately, ensuring a smooth transition and continued legacy of strong client relationships.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.