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Smith & Wesson Q1 Preview: Can Shares Snap Downtrend?

·2 min read

The Zacks Consumer Discretionary Sector has been hit harder than most YTD as consumers cut their spending on non-essential items. Down more than 30%, the performance widely lags behind the S&P 500.

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Zacks Investment Research


Image Source: Zacks Investment Research

A company residing in the sector, Smith & Wesson Brands SWBI, is on deck to unveil Q2 earnings on Thursday, September 8th, after the market close.

Smith & Wesson Brands designs, manufactures, and sells firearms. The company offers pistols, revolvers, rifles, handcuffs, and other related products and accessories.

As it stands, the company carries a Zacks Rank #3 (Hold) with an overall VGM Score of a C.

How does the firearms dealer shape up heading into the print? Let’s take a closer look.

Share Performance & Valuation

Smith & Wesson shares have struggled notably in 2022, down nearly 25% and extensively underperforming the S&P 500.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Little relief has come for Smith & Wesson shares over the last month, down nearly 6% and lagging the general market in this timeframe as well.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Still, Smith & Wesson’s 5.9X forward earnings multiple is nowhere near its five-year median of 10.9X and represents a staggering 71% discount relative to its Zacks Sector.

Further, SWBI carries a Style Score of an A for Value.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Quarterly Performance

SWBI has consistently exceeded bottom-line estimates, exceeding the Zacks Consensus EPS Estimate in six of its previous nine quarterly reports. However, in its latest release, SWBI reported EPS in line with the Zacks Consensus Estimate.

In addition, top-line results have left some to be desired. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Putting Everything Together

SWBI shares have tumbled year-to-date and over the last month, indicating that sellers have been in control.

Still, the company’s shares trade at enticing valuation multiples, with its forward earnings multiple residing nicely below its five-year median and Zacks Sector average.

The company has repeatedly exceeded bottom-line estimates, but its most recent print was in-line with the Zacks Consensus EPS Estimate.

Heading into the print, Smith & Wesson Brands SWBI carries a Zacks Rank #3 (Hold) with an overall VGM Score of a C.


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