Smith & Wesson: Dirt Cheap As Market Is At Peak - SEEKING ALPHA GREAT ARTICLE
When market is having a correction and is trading for low prices, it is very easy to find good value plays. On the other hand, when market is at (for Dow Jones Index) or near (for S&P 500 Index) all-time high, It becomes much more difficult to find good value plays, because a lot of stocks become either overpriced or at least fairly priced at that point. Smith & Wesson (SWHC) provides one of those great opportunities to get a growth stock for a really cheap price when the market is nearly peaking.
Putting all politics aside, the company's products see very strong demand, and the strong demand will not be going away anytime soon. We are looking at a company that grew its revenues by 39% in the last quarter, raised its guidance for another year of double-digit revenue growth, and this company still trades for a single digit P/E ratio. Apart from Apple (AAPL), Smith & Wesson is truly one of the cheapest companies out there.
According to Smith & Wesson's latest guidance, the company is expected to grow its revenues by another 40% and it is expected to earn $1.18 per share. Given the current share price of $9.20, we are looking at a pretty cheap stock. Typically, companies that can grow its revenues and earnings by 30-40% year on year will be assigned a P/E ratio of 20 or more. As a general rule, a P/E ratio of 10 implies that a company's revenues and earnings will be flat for the next few years. A P/E ratio of 20 or more. As a general rule, a P/E ratio of 10 implies that a company's revenues and earnings will be flat for the next few years. A P/E ratio below 10 implies that a company will see revenue and earnings drop and a P/E ratio above 10 implies that investors believe that the company will see revenue and earnings growth. This company already beat the latest estimates and gave guidance that suggest a lot
Basic - I think you summed it up very well. OE today, but there will be some exercising that drives up the price (my guess).
As to going private, that is a very good assessment. Companies of this size SHOULD be private and in this space MUST be private. MY thinking says that it should go private PRIOR to an announcement that they acquired some or all of the Freedom Assets. THOUGHTS???