Value
6.0/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 3.3 |
| P/S | 9.4 |
| EV/EBITDA | 4.8 |
| Fwd P/E | 2.5 |
| PEG | 9.8 |
- ▸Forward P/E: 46.5x
- ▸PEG: 0.54
SWBI · Why this verdict
Why Smith & Wesson Brands (SWBI) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.5/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | →Stable |
| 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.
→StableCatalyst 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.
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.
Per-dimension breakdown
Quality
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.6 |
| ROA | 2.2 |
| Gross margin | 1.4 |
| Op margin | 4.7 |
| Net margin | 1.8 |
| Current ratio | 9.8 |
| FCF quality | 10.0 |
| Moat | 6.4 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 455% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
9.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 9.2 |
| EPS growth | 10.0 |
- ▸Strong growth: 27% YoY
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 6.5 |
| OBV | 4.3 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Above 200-day MA
Sentiment
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.8 |
| erm sentiment | 5.0 |
Insider
7.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.8 |
| quality rank | 3.2 |
| growth rank | 7.2 |
Technical
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.0 |
| support resistance | 5.2 |
| 52w position | 7.7 |
Risk (lower is worse)
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.9 |
| days to cover | 7.4 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 3.9 |
| beta | 7.9 |
| debt equity | 9.4 |
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 3.5 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 3.5%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (7)
- MOMENTUM:5.0>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:58d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.4=NEGATIVE
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.36
Upside
-4.6%
Downside
12.7%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 64, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $0.7B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.0>=4.5. Top dim: Growth at 9.6; weakest: Momentum at 5.0. No conviction either direction.
The strongest dimensions are Growth at 9.6, Insider at 7.5, and Catalyst at 6.7; the weakest are Momentum at 5.0, Quality at 5.2, and Technical at 5.6. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.36 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.