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

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·2 min read
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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Smith & Wesson (SWBI). SWBI is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.

We should also highlight that SWBI has a P/B ratio of 4.74. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 7.15. Within the past 52 weeks, SWBI's P/B has been as high as 5.55 and as low as 1.50, with a median of 3.92.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SWBI has a P/S ratio of 1.11. This compares to its industry's average P/S of 2.05.

These are only a few of the key metrics included in Smith & Wesson's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SWBI looks like an impressive value stock at the moment.


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