Value
5.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 5.0 |
| P/S | 9.6 |
| EV/EBITDA | 5.6 |
| Fwd P/E | 5.6 |
| PEG | 4.0 |
- ▸Forward P/E: 23.0x
- ▸PEG: 2.53
SWBI · Why this verdict
Why Smith & Wesson Brands (SWBI) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.9/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Smith & Wesson pairs a perfect earnings beat streak and strong cash conversion with weakening near-term momentum and a dividend the engine flags as a yield trap.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten earnings estimates in all of the last 4 quarters, with catalyst notes flagging a perfect beat streak alongside strong 27% YoY revenue growth. Bull case | The beat streak should continue with at least 3 of the next 4 quarters beating estimates. | →Stable |
| CounterThe bear case notes that the analyst price target has already been reached, meaning further beats may not translate into fresh upside without target revisions. | ||
Quality notes highlight excellent cash conversion at 455% FCF/NI and a strong Piotroski F-Score of 8/9, reflecting high fundamental quality. Quality breakdown | FCF/NI conversion should stay above 200% as the balance sheet strength persists. | →Stable |
| CounterGross and operating margins remain modest in absolute terms, so the strong cash conversion could partly reflect working-capital timing rather than durable margin expansion. | ||
The momentum gate failed at 3.0, well below the 4.5 threshold, and the asymmetry ratio is negative at -0.14, reflecting an unfavorable near-term risk/reward. Engine gate (failed) | The momentum score should recover above 4.5 as negative price action stabilizes. | →Stable |
| CounterThe stock still trades above its 200-day moving average, suggesting the broader long-term uptrend remains intact even as short-term momentum has weakened. | ||
Catalyst notes flag a yield-trap warning, describing the dividend yield as high but potentially unsafe. Catalyst breakdown | The dividend should be maintained without a cut over the next four quarters if the yield-trap warning proves overstated. | ↓Deteriorating |
| CounterThe excellent cash conversion (455% FCF/NI) and strong Piotroski score suggest the balance sheet can likely support the current dividend despite the warning. | ||
The company has beaten earnings estimates in all of the last 4 quarters, with catalyst notes flagging a perfect beat streak alongside strong 27% YoY revenue growth.
→StableBull case
- Expectation
- The beat streak should continue with at least 3 of the next 4 quarters beating estimates.
CounterThe bear case notes that the analyst price target has already been reached, meaning further beats may not translate into fresh upside without target revisions.
Quality notes highlight excellent cash conversion at 455% FCF/NI and a strong Piotroski F-Score of 8/9, reflecting high fundamental quality.
→StableQuality breakdown
- Expectation
- FCF/NI conversion should stay above 200% as the balance sheet strength persists.
CounterGross and operating margins remain modest in absolute terms, so the strong cash conversion could partly reflect working-capital timing rather than durable margin expansion.
The momentum gate failed at 3.0, well below the 4.5 threshold, and the asymmetry ratio is negative at -0.14, reflecting an unfavorable near-term risk/reward.
→StableEngine gate (failed)
- Expectation
- The momentum score should recover above 4.5 as negative price action stabilizes.
CounterThe stock still trades above its 200-day moving average, suggesting the broader long-term uptrend remains intact even as short-term momentum has weakened.
Catalyst notes flag a yield-trap warning, describing the dividend yield as high but potentially unsafe.
↓DeterioratingCatalyst breakdown
- Expectation
- The dividend should be maintained without a cut over the next four quarters if the yield-trap warning proves overstated.
CounterThe excellent cash conversion (455% FCF/NI) and strong Piotroski score suggest the balance sheet can likely support the current dividend despite the warning.
Per-dimension breakdown
Quality
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.2 |
| ROA | 2.6 |
| Gross margin | 1.4 |
| Op margin | 0.5 |
| Net margin | 2.2 |
| Current ratio | 9.4 |
| FCF quality | 10.0 |
| Moat | 6.4 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 302% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
6.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 3.8 |
- ▸Strong growth: 32% YoY
Momentum
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.4 |
| MACD | 9.6 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 1.5 |
- ▸Overbought (RSI 72)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.4 |
| Price target | 8.0 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (2.0) — signal dampened
- ▸Analyst upside: 23%
Insider
5.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.9 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
6.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.4 |
| quality rank | 3.5 |
| growth rank | 6.7 |
Technical
2.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.0 |
| 52w position | 6.3 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.1 |
| days to cover | 4.9 |
| volatility | 3.0 |
| put call | 1.1 |
| implied vol | 5.4 |
| beta | 7.8 |
| debt equity | 9.2 |
- ▸Elevated put/call: 1.83
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.2 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 3.8%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.9>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:72d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.3<1.5@spot
Warning (0)
none
Reward-to-Risk
0.29
Upside
+4.3%
Downside
14.9%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $0.6B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 7.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.3<1.5@spot) reinforce the read. Current asymmetry R:R is 0.29 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 7.0, Growth at 6.9, and Momentum at 6.9; the weakest are Technical at 2.1, Quality at 4.8, and Risk (lower is worse) at 5.5. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 0.29 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Beat Streak Strong Growth
Trip ifEarnings beat streak drops below 2 of the next 4 quarters.
- P2Excellent Cash Conversion
Trip ifFCF/NI conversion falls below 150%, down from the current 455%.
- P3Failed Momentum Negative Asymmetry
Trip ifMomentum score stays below 3.5 for 2 consecutive quarters.
- P4Yield Trap Warning
Trip ifDividend per share is cut by more than 20% within the next 4 quarters.