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Smith & Wesson Brands, Inc. (NASDAQ:SWBI), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$11.16 at one point, and dropping to the lows of US$9.35. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Smith & Wesson Brands' current trading price of US$9.35 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Smith & Wesson Brands’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is Smith & Wesson Brands Worth?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 16% below our intrinsic value, which means if you buy Smith & Wesson Brands today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $11.16, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Smith & Wesson Brands’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
View our latest analysis for Smith & Wesson Brands
Can we expect growth from Smith & Wesson Brands?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected next year, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Smith & Wesson Brands, at least in the near future.
What This Means For You
Are you a shareholder? SWBI seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.