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Smith & Wesson Brands, Inc. (SWBI)
NASDAQ:SWBI
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Smith & Wesson Brands
(NASDAQ:SWBI)
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Rating:66Neutral
Price Target:
$12.50
▲(6.02% Upside)
Action:ReiteratedDate:03/06/26
The score is driven by improving near-term outlook and operating momentum from the earnings call (sales and margin guidance, cash generation, debt paydown) and supportive technical trends. This is tempered by weaker underlying profitability versus prior years and a valuation that looks expensive on P/E despite a strong dividend yield.
Positive Factors
Handgun unit growth & new-product adoption
Sustained 28% handgun unit growth and 44% contribution from new products point to a durable product pipeline and improving market share. This drives repeatable revenue, supports higher ASPs, and signals brand momentum in core civilian and institutional channels over the medium term.
Improving cash generation and active debt reduction
Quarterly cash-flow turnaround and ongoing borrowings paydown strengthen financial flexibility. Better cash generation funds capex, dividends and working capital, lowers leverage risk, and improves resilience to demand swings and funding costs over the next several quarters.
Manageable leverage and sizable equity base
A conservative balance-sheet structure with debt-to-equity near 0.3 and meaningful equity relative to assets provides capacity for strategic investment and downside protection. This supports continued capex, R&D and dividend policy without excessive refinancing stress.
Negative Factors
Compressed profitability margins
Margins remain well below prior peak levels, indicating structural pressure from pricing, costs or mix. Low operating and net margins reduce reinvestment capacity and magnify earnings sensitivity to cost inflation or weaker volumes, limiting durable return generation.
Product-mix concentration; long-gun weakness
Heavy reliance on handgun strength while long-gun volumes and ASPs fall creates revenue concentration risk. Durable top-line growth depends on re-balancing categories; persistent long-gun underperformance would amplify earnings volatility and constrain sustainable growth.
Tariff headwinds and rising operating expenses
Structural margin pressure from tariffs and materially higher operating costs erode operating leverage. If tariffs persist or opex growth continues (R&D, stock comp, profit sharing), margin recovery could be limited and free cash flow variability may recur despite recent improvements.
Smith & Wesson Brands (SWBI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$524.58M
Dividend Yield5.1%
Average Volume (3M)598.95K
Price to Earnings (P/E)32.3
Beta (1Y)0.52
Revenue Growth-9.08%
EPS Growth-71.62%
CountryUS
Employees1,501
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.08
Shares Outstanding44,493,744
10 Day Avg. Volume821,562
30 Day Avg. Volume598,947
Financial Highlights & Ratios
PEG Ratio-0.48
Price to Book (P/B)1.13
Price to Sales (P/S)0.88
P/FCF Ratio-14.46
Enterprise Value/Market Cap1.19
Enterprise Value/Revenue1.29
Enterprise Value/Gross Profit4.87
Enterprise Value/Ebitda28.55
Forecast
1Y Price Target
$14.00Price Target Upside18.74% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)0.22
Revenue Forecast (FY)$477.56M
Smith & Wesson Brands Business Overview & Revenue Model
Company DescriptionSmith & Wesson Brands, Inc. designs, manufactures, and sells firearms worldwide. The company offers handguns, including revolvers and pistols; long guns, such as modern sporting rifles, bolt action rifles; handcuffs; suppressors; and other firearm-related products under the Smith & Wesson, M&P, and Gemtech brands. It also provides manufacturing services comprising forging, heat treating, rapid prototyping, tooling, finishing, plating, machining, and custom plastic injection molding to other businesses under the Smith & Wesson and Smith & Wesson Precision Components brand names; and sells parts purchased through third parties. The company sells its products to firearm enthusiasts, collectors, hunters, sportsmen, competitive shooters, individuals desiring home and personal protection, law enforcement, security agencies and officers, and military agencies. It markets its products through independent dealers, retailers, in-store retails, and direct to consumers; print, broadcast, and digital advertising campaigns; social and electronic media; and in-store retail merchandising strategies. Smith & Wesson Brands, Inc. was founded in 1852 and is based in Springfield, Massachusetts.
How the Company Makes MoneySmith & Wesson generates revenue through the sale of its firearms and ammunition, which constitute its primary revenue stream. The company sells its products directly to consumers, as well as through a network of distributors, retailers, and law enforcement agencies. Additionally, SWBI benefits from government contracts and military sales, which often provide significant revenue opportunities. The company also earns income from licensing agreements and partnerships within the firearms and outdoor recreation sectors. Seasonal demand, particularly during hunting seasons and in response to legislative changes affecting gun ownership, further influences its sales performance. Overall, the diverse product range and strategic partnerships are key contributors to Smith & Wesson's earnings.
Smith & Wesson Brands Key Performance Indicators (KPIs)
Any
Handguns Total Units Shipped by Channel
Tracks the number of handguns shipped through various sales channels, indicating demand trends, channel performance, and potential shifts in consumer preferences.
Tracks the number of handguns shipped through various sales channels, indicating demand trends, channel performance, and potential shifts in consumer preferences.
Data provided by:
The Fly
The FlySmith & Wesson Brands Earnings Call Summary
Earnings Call Date:Mar 05, 2026
(Q3-2026)
| Next Earnings Date:Jun 18, 2026
Earnings Call Sentiment Positive
The call was largely positive: the company reported strong top-line growth (+17.1%), improved profitability (EBITDAS +~21%, adjusted EPS up materially), robust handgun unit growth (+28%) and meaningful cash generation turnaround (operating cash flow of $20.5M vs a use of $9.8M prior-year). Management highlighted successful new-product adoption, ASP expansion, debt paydown and a constructive near-term outlook (Q4 sales guide +10–12%). Offsetting items include significant weakness in long guns (shipments -25%, ASP -11%), a tariff-related 160 bps drag on gross margin, rising operating expenses, a modest cash balance ($23.5M) versus remaining borrowings, and some channel inventory unit variability. On balance, the positive operational and financial momentum, guidance, and balance-sheet improvement outweigh the listed challenges.Q3-2026 Updates
Positive Updates
Revenue Growth
Net sales of $135.7 million, up $19.8 million or 17.1% year-over-year, driven by new handgun products and stronger sell-through.
Improved Profitability and EPS
EBITDAS of $16.8 million, up nearly 21% year-over-year; GAAP EPS of $0.08 vs $0.05 prior year and adjusted (non-GAAP) EPS $0.08 vs $0.03 prior year; net income $3.8 million vs $2.1 million prior year.
Strong Cash Generation and Balance Sheet Progress
Operating cash flow of $20.5 million in the quarter versus cash used of $9.8 million year-ago; internal inventory down to $175 million (down $23 million versus prior Q3); borrowings of $75 million at quarter-end (down from $90 million in Q2) and an additional $20 million repaid subsequent to quarter-end (bringing post-paydown borrowings to $55 million).
Handgun Performance and ASP Strength
Handgun unit shipments into the sporting goods channel up 28% year-over-year; handgun mix down 2.2%; handgun average selling price up 5.2% versus prior year to over $419 (also above Q2 levels). New handgun products represented 44% of handgun shipments. A price increase (~2–3% effective January 1) was implemented and saw no pushback.
Product Innovation, Market Share and Channel Momentum
New products were 44% of handgun shipments and 28% of long gun shipments; management cited continued market share gains, positive SHOT Show feedback, and strong law-enforcement momentum (shipped to nearly 1,000 agencies in the past 18 months) with a healthy institutional pipeline.
Raised Near-Term Outlook
Management expects Q4 sales to be up 10%–12% year-over-year, gross margin to increase several percentage points versus Q3 (and ~1–2 points versus prior-year Q4), continued healthy cash generation, and reaffirmed capital spending guidance of $25–$30 million for the year. Board authorized a $0.13 quarterly dividend.
Gross Margin Expansion Year-over-Year
Reported gross margin of 26.2%, up 210 basis points year-over-year, driven by increased production volume, lower promotion costs and lower federal excise taxes (partially offset by tariffs).
Negative Updates
Long Gun Weakness
Long gun shipments into the sporting goods channel declined 25% year-over-year and overall long gun mix declined 5.6%; long gun ASPs were $535, down about 11% versus the prior year, primarily due to prior-year channel fill of higher-priced 1854 lever-action rifle introductions and relative outperformance of the hunting segment.
Tariff Headwind to Margins
Tariffs negatively impacted gross margin by approximately 160 basis points in the quarter, partially offsetting other margin improvements.
Higher Operating Expenses
Operating expenses increased to $28.9 million, $5.7 million higher than the prior year (an increase of roughly 24.6% versus the prior-year quarter when excluding a $2.3 million gain on sale of real estate reported last year), driven by higher profit-related and stock-based compensation and other expense items.
Distributor Inventory Units Increased QoQ
Distributor inventory in actual units increased approximately 20% versus the end of the prior quarter (though only ~4% versus end of January 2025); weeks of supply remained steady at ~9 weeks but the unit increase could signal channel stocking variability.
Modest Cash Balances and Remaining Leverage
Cash and investments were $23.5 million at quarter-end while borrowings were $75 million (though management subsequently repaid $20 million). The cash position is modest relative to outstanding debt, exposing some leverage sensitivity despite recent paydowns.
Concentration of Strength in Handguns
Material growth and profitability were driven predominantly by handguns and new-product ASP strength; long guns underperformed, indicating product-mix sensitivity and reliance on a narrower set of category drivers.
Near-Term Cost and Expense Pressures
Management expects Q4 operating expenses to be about 10% higher than last year's Q4 due to R&D, stock compensation, profit sharing and related costs, which could pressure near-term operating leverage despite margin improvement.
Company Guidance
Management guided Q4 sales to be up 10%–12% versus Q4 FY2025 with a small reduction in channel inventory, noting 8 additional operating days vs. Q3 and increased production to meet demand; they expect Q4 gross margin to rise by “several” percentage points over Q3 (and ~1–2 points above last year’s Q4) while operating expenses are likely ~10% higher than last year’s Q4 due to higher R&D, stock‑based compensation and profit‑related costs. They also forecast continued healthy cash generation, an effective tax rate of ~29%, full‑year capex of $25–30 million, and confirmed a $0.13 quarterly dividend (record March 19, pay April 2).Smith & Wesson Brands Financial Statement Overview
Summary
Balance sheet is solid with manageable leverage (debt-to-equity ~0.31–0.34), and TTM cash flow improved (operating cash flow ~$80M; free cash flow ~$73M). However, profitability has compressed sharply versus prior years (TTM net margin ~2.1%, operating margin ~4.3%) with only modest TTM revenue growth (+4.3%), keeping the financial performance score moderate.Income Statement
TTM (Trailing-Twelve-Months) revenue is up modestly (+4.3%), but profitability has compressed sharply versus prior years: net margin is ~2.1% TTM (vs. ~7–8% in FY2023–FY2024 and >20% in FY2021–FY2022) and operating margin is ~4.3% TTM. The multi-year trend shows a steep downshift from the exceptional FY2021–FY2022 earnings level, suggesting a tougher demand/pricing environment and/or higher cost pressure, with only a partial recovery in top-line growth.48
Neutral
Balance Sheet
Leverage looks manageable with debt-to-equity around ~0.31–0.34 in the latest periods, and equity remains sizable relative to assets (equity of ~$363M vs. assets of ~$538M TTM). Return on equity has normalized to low single-digits TTM (~2.7%) after very strong levels in FY2021–FY2022, reflecting the earnings decline more than balance-sheet stress. Overall, the balance sheet appears solid, though profitability-driven returns are currently weak.74
Positive
Cash Flow
Cash generation is volatile. TTM shows strong operating cash flow (~$80M) and free cash flow (~$73M) with a sharp improvement versus the prior annual period, but FY2025 saw negative operating and free cash flow. Cash conversion is mixed: TTM free cash flow is meaningfully above net income, implying good cash realization in the most recent period, yet the prior year’s negative cash flow highlights execution/working-capital swings that can recur.57
Neutral
| Breakdown | TTM | Apr 2025 | Apr 2024 | Apr 2023 | Apr 2022 | Apr 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 486.22M | 474.66M | 535.83M | 479.24M | 864.13M | 1.06B |
| Gross Profit | 128.56M | 127.18M | 158.09M | 154.54M | 374.56M | 448.98M |
| EBITDA | 21.91M | 55.71M | 84.01M | 81.10M | 281.64M | 350.32M |
| Net Income | 11.99M | 13.43M | 39.61M | 36.88M | 194.49M | 252.05M |
Balance Sheet | ||||||
| Total Assets | 538.00M | 559.61M | 577.43M | 541.29M | 497.48M | 446.39M |
| Cash, Cash Equivalents and Short-Term Investments | 23.46M | 25.23M | 60.84M | 53.56M | 120.73M | 113.02M |
| Total Debt | 0.00 | 114.73M | 77.80M | 64.46M | 40.28M | 41.18M |
| Total Liabilities | 174.59M | 187.16M | 177.51M | 156.67M | 136.96M | 180.00M |
| Stockholders Equity | 363.42M | 372.45M | 399.91M | 384.62M | 360.51M | 266.38M |
Cash Flow | ||||||
| Free Cash Flow | 73.11M | -29.02M | 15.79M | -73.17M | 113.56M | 292.65M |
| Operating Cash Flow | 80.44M | -7.22M | 106.74M | 16.73M | 137.81M | 315.33M |
| Investing Cash Flow | -30.85M | -19.17M | -81.49M | -89.78M | -24.12M | -23.40M |
| Financing Cash Flow | -57.87M | -9.21M | -17.97M | 5.88M | -105.99M | -303.92M |
Smith & Wesson Brands Technical Analysis
Positive
11.79
Price Trends
11.09
Positive
10.26
Positive
9.48
Positive
Market Momentum
0.23
Positive
55.15
Neutral
63.49
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SWBI, the sentiment is Positive. The current price of 11.79 is below the 20-day moving average (MA) of 11.82, above the 50-day MA of 11.09, and above the 200-day MA of 9.48, indicating a neutral trend. The MACD of 0.23 indicates Positive momentum. The RSI at 55.15 is Neutral, neither overbought nor oversold. The STOCH value of 63.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $544.37M | 31.84 | 8.11% | 2.53% | 7.63% | 7.09% | |
66 Neutral | $524.58M | 32.29 | 2.71% | 5.10% | -9.08% | -71.62% | |
66 Neutral | $283.39M | 42.35 | 16.13% | ― | 50.99% | 612.36% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | $591.69M | -120.73 | -1.46% | 1.92% | 3.90% | -92.10% | |
57 Neutral | $249.82M | 22.47 | ― | ― | -11.01% | -279.70% | |
55 Neutral | $47.35M | -38.14 | -1.26% | ― | -23.87% | -109.71% |
* Industrials Sector Average
SWBI
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26.83%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.