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Is Smith & Wesson (SWBI) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Smith & Wesson (SWBI). SWBI is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.

Investors should also recognize that SWBI has a P/B ratio of 4.41. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 7.21. Over the past year, SWBI's P/B has been as high as 7.08 and as low as 1.94, with a median of 4.09.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SWBI has a P/S ratio of 1.09. This compares to its industry's average P/S of 2.14.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Smith & Wesson is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SWBI feels like a great value stock at the moment.


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