Value
5.9/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 5.2 |
| P/S | 9.6 |
| EV/EBITDA | 5.8 |
| Fwd P/E | 5.9 |
| PEG | 4.5 |
- ▸Forward P/E: 22.0x
- ▸PEG: 1.98
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. How we score · Editorial policy
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. People who build TrendMatrix, or entities they control, may hold positions, long or short, in securities it covers, and may trade them at any time. Positions are not disclosed individually. Verdicts are generated by an automated model applied by the same rules to every covered stock, and are not adjusted for any position held by the people who build TrendMatrix. We do not accept payment from issuers for coverage.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.8/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Smith & Wesson has a perfect four-quarter earnings beat streak, 32% revenue growth and excellent cash conversion, but weak momentum, a 22x forward P/E and only 11.2% upside to the analyst target limit the setup.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Smith & Wesson beat EPS estimates in all 4 of the last 4 quarters, including $0.06 versus -$0.05 expected in the latest report. Last 4 quarters | EPS should keep meeting or beating estimates in the next four reports. | ↑Improving |
| CounterBeats against low or negative estimates are easy to deliver, and the forward P/E of 22.0x already assumes a strong earnings recovery. | ||
Free cash flow is 302% of net income and the Piotroski F-Score is 8/9, showing strong cash generation and improving fundamentals. Quality breakdown | FCF/net income should stay above 100% and support the 3.9% dividend. | →Stable |
| CounterOperating margin scores only 0.5/10 and ROE 2.2/10, so cash conversion on thin earnings may reflect working-capital swings. | ||
Revenue is growing 32% YoY, scoring 10/10 on revenue growth, although earnings growth scores only 4.2/10. Growth breakdown | Revenue growth should stay above 15% YoY over the next 12 months. | →Stable |
| CounterFirearm demand is cyclical and event-driven, so a growth spike can reverse quickly. | ||
Momentum is 2.4/10 with falling on-balance volume and price below the 200-day average, though that average is still rising 4.8% over 30 days, suggesting a pullback in an uptrend. Momentum breakdown | Price should reclaim the 200-day average and momentum should recover above 4.5. | ↓Deteriorating |
| CounterDistribution via falling on-balance volume suggests sellers are in control, and the position is rated AVOID. | ||
The analyst target of $14.66 is 11.2% above the $13.18 price, with 7.6% downside to the stop for a reward-to-risk of 1.48. Analyst target | Price should reach $14.66 as earnings recover. | ↑Improving |
| CounterThe forward P/E is 22.0x and the PEG is 1.98, so the stock is not cheap and upside is limited. | ||
Smith & Wesson beat EPS estimates in all 4 of the last 4 quarters, including $0.06 versus -$0.05 expected in the latest report.
↑ImprovingLast 4 quarters
- Expectation
- EPS should keep meeting or beating estimates in the next four reports.
CounterBeats against low or negative estimates are easy to deliver, and the forward P/E of 22.0x already assumes a strong earnings recovery.
Free cash flow is 302% of net income and the Piotroski F-Score is 8/9, showing strong cash generation and improving fundamentals.
→StableQuality breakdown
- Expectation
- FCF/net income should stay above 100% and support the 3.9% dividend.
CounterOperating margin scores only 0.5/10 and ROE 2.2/10, so cash conversion on thin earnings may reflect working-capital swings.
Revenue is growing 32% YoY, scoring 10/10 on revenue growth, although earnings growth scores only 4.2/10.
→StableGrowth breakdown
- Expectation
- Revenue growth should stay above 15% YoY over the next 12 months.
CounterFirearm demand is cyclical and event-driven, so a growth spike can reverse quickly.
Momentum is 2.4/10 with falling on-balance volume and price below the 200-day average, though that average is still rising 4.8% over 30 days, suggesting a pullback in an uptrend.
↓DeterioratingMomentum breakdown
- Expectation
- Price should reclaim the 200-day average and momentum should recover above 4.5.
CounterDistribution via falling on-balance volume suggests sellers are in control, and the position is rated AVOID.
The analyst target of $14.66 is 11.2% above the $13.18 price, with 7.6% downside to the stop for a reward-to-risk of 1.48.
↑ImprovingAnalyst target
- Expectation
- Price should reach $14.66 as earnings recover.
CounterThe forward P/E is 22.0x and the PEG is 1.98, so the stock is not cheap and upside is limited.
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
7.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 4.2 |
- ▸Strong growth: 32% YoY
Momentum
2.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.9 |
| OBV | 1.5 |
| MA position | 2.2 |
| Volume | 3.1 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+4.7%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 8.6 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 30%
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
6.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.5 |
| quality rank | 3.4 |
| growth rank | 6.5 |
Technical
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.5 |
| support resistance | 9.4 |
| 52w position | 5.4 |
| gap | 5.0 |
Risk (lower is worse)
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 6.7 |
| volatility | 3.0 |
| put call | 10.0 |
| implied vol | 3.3 |
| beta | 8.1 |
| debt equity | 9.2 |
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.8 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 3.9%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:31d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.2<4.5
- ASYMMETRY:1.4<1.5@spot
Warning (0)
none
Reward-to-Risk
1.40
Upside
+10.7%
Downside
7.6%
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 4.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 7.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.2<4.5, ASYMMETRY:1.4<1.5@spot) reinforce the read. Current asymmetry R:R is 1.40 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 7.3, Catalyst at 7.2, and Growth at 7.1; the weakest are Momentum at 2.2, Quality at 4.8, and Insider at 5.5. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 1.40 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Streak
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P2Excellent Cash Conversion
Trip ifFCF/net income falls below 100% for 2 consecutive quarters.
- P3Strong Revenue Growth
Trip ifRevenue growth falls below 10% YoY for 2 consecutive quarters.
- P4Negative Momentum Pullback
Trip ifPrice drops to below the $12.73 stop level.
- P5Limited Upside To Target
Trip ifForward P/E exceeds 28x from the current 22.0x.