Very good question!!
The stock price may be cheap, but there is a very good reason for that. You are buying Cheap Management. Please do some due diligence. Here are some starting points on any research:
1) Old management that bought security company is still there. Still running the show and still milking the cow via always "IN THE MONEY" options granted by the MILLIONS to Insiders as low as $1.47 per option.
2) Seeking Alpha writer made NO mention of recently announced $250 Million Secondary that is hanging over the stock price. Last time they did secondary (May 2009) stock dropped $1.06 when Company announced pricing after Market close on May 6. This will happen again when they announce current pricing. Remember...announcement was made AFTER market was closed. Holders at that point in time were trapped into a disastrous rout the next morning.
3) CEO Debney and President Mike Golden never even fired a gun until they were notified they would get an interview for the Management jobs.
4) Lawsuit filed in Feb. 2013 against Company giving away 500,000 options to CEO even though SWHC by-laws state that the most options that can be awarded is capped at 300,000 per person.
5) RGR pays dividend because they have proven track record with earnings, SWHC does not; Look at Bio's of SWHC Board and insiders compared to RGR. RGR has Industry Titans; SWHC has Pink Sheet kings.
6) Mike Golden who wrote a 14 page book (yep, 14 pages) and did the Security fence deal is still one of the main guys at the helm. He also wrote a 17 page book. Too hilarious.
7) Noted firearm expert, Chuck Hawks wrote a article called The Dark Secret at Smith and Wesson, which you need to read.
8) This is just a slip-shod management that ran this company through 2 disastrous acquisitions that cost over $135 million. All are still there.
9) Massively excessive options granted to executive board and insiders at always "in the Money" prices.
You want world class management and guns; go to RGR
Who really cares about 2008? That was five years ago. The company has new management, its balance sheet is far stronger, and it has over $60 million in cash. The company is performing almost exactly like Ruger. It has the same level of revenues, net income and casflow. Swhc has a far stronger cash position, even after buying back $35 million in shares.
Sentiment: Strong Buy
Michael Golden (Still an Insider and calling the shots) was hired in 2004 to turn the Company around. Under his tutelage the stock saw a rebound at first, as they had been decimated by Glock coming onto the scene. Thus it was fairly easy to tweak a few things to get sales in gear, plus the biggie was Golden, himself, who spent a significant amount of time in Washington rubbing elbows with the appropriate decision makers on govt. conracts.
On October 29, 2007, the party came to an end after Smith and Wesson reported the preliminary second quarter financial results which caused the stock price to go from $20.09 that day to $12.12 the following day, which is nearly a 40 percent decline in a single day. Then exactly, one year later on October 28, 2008, the stock closed at $1.58 per share. Ouch!
Golden made 2 totally disastarous mistakes.....2 acquisitions.......both for $ 50 million. One was written off for $50 Milllion, the next was sold and written off for $85 million. This joke of a manager is still calling the shots. He is the one who hired Debeney, the current CEO who had himself never befored a firearm in his entire adult life.
Long story short, Golden has just recently announced a Secondary priced at FIVE TIMES ($250 Million) more than any other Secondary SWHC had previously priced. This man has made over tens of millions, perhaps hundreds of millions in monetary awards, most being by low balled stock options. He's still calling the shots and he is going to price the Secondary at $7.50.
Not sure you want to recall the day SWHC dropped 15% overnight and you were holding the stock, but that's your call.....you've been informed and warned.
There you go spouting off about that Secondary again. How do you know Golden was the one who announced that. He is a Director, not the CEO, as he would not be the one to announce such a thing. Where do you get your price for the secondary also ? Or do you have the Inside Track, once again...lol