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

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 to watch right now is Smith & Wesson (SWBI). SWBI is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 13.95, which compares to its industry's average of 31.68. Over the last 12 months, SWBI's Forward P/E has been as high as 20.32 and as low as 5.26, with a median of 9.27.

Another valuation metric that we should highlight is SWBI's P/B ratio of 3.30. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. SWBI's current P/B looks attractive when compared to its industry's average P/B of 5.21. Over the past year, SWBI's P/B has been as high as 3.30 and as low as 0.70, with a median of 1.12.

Finally, investors will want to recognize that SWBI has a P/CF ratio of 13.98. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. SWBI's P/CF compares to its industry's average P/CF of 28.70. SWBI's P/CF has been as high as 13.98 and as low as 4.14, with a median of 6.42, all within the past year.

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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