Breaking Down Smith & Wesson Brands, Inc. (SWBI) Financial Health: Key Insights for Investors

Are you looking to assess the financial strength of Smith & Wesson Brands, Inc. (SWBI) before making investment decisions? Let's delve into some key figures from their recent financial reports. In the third quarter of fiscal year 2025, which ended on January 31, 2025, the company reported net sales of $115.9 million, a 15.7% decrease compared to the same quarter last year. The gross margin stood at 24.1%, down from 28.7%. Want to know more about how these numbers reflect the company's overall financial health and future prospects? Keep reading to uncover detailed insights.

Smith & Wesson Brands, Inc. (SWBI) Revenue Analysis

Understanding where Smith & Wesson Brands, Inc. (SWBI) generates its revenue and how those streams have changed over time is crucial for investors. Let's delve into the key components of their financial performance.

Breakdown of Primary Revenue Sources: Smith & Wesson Brands, Inc. (SWBI) primarily generates revenue through the sale of firearms. These include handguns (such as pistols and revolvers), long guns (rifles and shotguns), and other related products and accessories. The company caters to a broad customer base, including shooting sports enthusiasts, hunters, law enforcement agencies, and military entities. Revenue is derived from sales within the United States and in international markets.

Year-over-Year Revenue Growth Rate: Analyzing the year-over-year revenue growth rate provides insights into the company's performance trends. While specific recent figures may vary, it's important to consider both historical data and the most current reports available. Revenue growth can be influenced by factors such as consumer demand, regulatory changes, and competitive pressures. For instance, periods of increased demand, such as those driven by concerns about personal safety or changes in legislation, can lead to significant revenue growth. Conversely, market saturation or economic downturns can result in decreased sales.

For example, according to the Smith & Wesson Brands, Inc. (SWBI) Q3 2024 earnings report, net sales for the third quarter of fiscal 2024 were reported at $147.5 million. This reflects a decrease of 24.7% compared to the $195.2 million reported in the third quarter of fiscal 2023.

Here's a summary of Smith & Wesson Brands, Inc. (SWBI)'s financial performance:

• Net sales for Q3 2024 were $147.5 million, a 24.7% decrease from $195.2 million in Q3 2023.
• Gross profit for Q3 2024 was $51.7 million, compared to $73.8 million in Q3 2023.
• Operating expenses for Q3 2024 totaled $43.4 million, up from $39.7 million in Q3 2023.
• Net income for Q3 2024 was $9.3 million ($0.22 per diluted share), down from $35.5 million ($0.77 per diluted share) in Q3 2023.

Contribution of Different Business Segments to Overall Revenue: The vast majority of Smith & Wesson Brands, Inc. (SWBI)'s revenue comes from the firearms segment. Handguns and long guns are the primary drivers, with the relative contribution of each varying depending on market trends and consumer preferences.

Analysis of Any Significant Changes in Revenue Streams: Investors should pay close attention to any shifts in Smith & Wesson Brands, Inc. (SWBI)'s revenue streams. Factors that could cause changes include:

• New Product Launches: Introduction of innovative firearms or accessories can boost sales.
• Market Expansion: Entering new geographic markets or customer segments can increase revenue.
• Regulatory Changes: Changes in firearms regulations can significantly impact demand and sales.
• Economic Conditions: Economic downturns can reduce consumer spending on discretionary items like firearms.

For a deeper understanding of Smith & Wesson Brands, Inc. (SWBI)'s values, explore: Mission Statement, Vision, & Core Values of Smith & Wesson Brands, Inc. (SWBI).

To illustrate, here’s a table summarizing Smith & Wesson Brands, Inc. (SWBI)'s sales data from their Q3 2024 report:

Analyzing these elements provides a comprehensive view of Smith & Wesson Brands, Inc. (SWBI)'s financial health and revenue generation strategies.

Smith & Wesson Brands, Inc. (SWBI) Profitability Metrics

Understanding Smith & Wesson Brands, Inc. (SWBI)'s profitability involves examining several key financial metrics that provide insights into the company's ability to generate earnings from its revenue. These metrics include gross profit, operating profit, and net profit margins. Analyzing these figures over time and comparing them to industry averages helps investors gauge the company's financial health and operational efficiency.

Let's explore these metrics based on the available data.

Gross Profit:

Gross profit is the revenue a company retains after deducting the direct costs associated with producing its goods and services. It indicates how efficiently a company uses its raw materials, labor, and production overhead to generate revenue. For Smith & Wesson Brands, Inc. (SWBI), monitoring the gross profit trend reveals its capability to manage production costs and maintain pricing power.

Operating Profit:

Operating profit assesses a company's profitability from its core business operations, excluding interest and taxes. It is calculated by deducting operating expenses, such as salaries, marketing costs, and administrative expenses, from the gross profit. The operating profit margin, which is operating profit divided by total revenue, offers insights into how well a company controls its operating expenses and generates profit from its primary activities.

Net Profit:

Net profit, often referred to as the bottom line, represents a company's profit after all expenses, including interest, taxes, and other non-operating expenses, have been deducted from its total revenue. The net profit margin, calculated as net profit divided by total revenue, is a comprehensive measure of a company's overall profitability. It reflects the percentage of revenue that ultimately translates into profit for shareholders.

Trends in Profitability Over Time:

Analyzing the trends in gross profit, operating profit, and net profit margins over several periods provides valuable insights into the sustainability and growth potential of Smith & Wesson Brands, Inc. (SWBI). Consistent improvement in these margins may indicate enhanced operational efficiency, effective cost management, or successful pricing strategies. Conversely, declining margins could signal increasing costs, competitive pressures, or operational challenges.

Comparison of Profitability Ratios with Industry Averages:

Benchmarking Smith & Wesson Brands, Inc. (SWBI)'s profitability ratios against industry averages offers a perspective on its relative performance. If the company's gross, operating, and net profit margins are higher than the industry averages, it may suggest a competitive advantage, superior operational efficiency, or a differentiated product offering. Conversely, lower margins compared to peers may indicate areas for improvement in cost management, pricing strategies, or operational processes.

Analysis of Operational Efficiency:

Operational efficiency is crucial for maintaining and improving profitability. Effective cost management directly impacts gross margins, while efficient management of operating expenses influences operating profit margins. Analyzing trends in these areas helps identify strengths and weaknesses in Smith & Wesson Brands, Inc. (SWBI)'s operational strategies.

For instance, improvements in supply chain management, production processes, or marketing strategies can lead to higher gross margins and better overall profitability. Conversely, inefficiencies or rising costs in these areas can negatively impact the company's financial performance.

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Smith & Wesson Brands, Inc. (SWBI) Debt vs. Equity Structure

Understanding how Smith & Wesson Brands, Inc. (SWBI) finances its operations and growth is crucial for investors. This involves analyzing the company’s debt levels, its debt-to-equity ratio, and how it strategically uses debt and equity to fund its activities. Here’s a detailed look at SWBI’s debt and equity structure:

As of January 31, 2024, Smith & Wesson Brands, Inc. (SWBI) reported the following debt situation:

• Total cash: $73.3 million
• Total debt: $448.4 million

This indicates that while SWBI holds a considerable amount of cash, its debt obligations are significantly higher. The interplay between these figures is vital in assessing the company's financial stability and flexibility.

Debt-to-Equity Ratio

The debt-to-equity ratio is a key metric for evaluating a company's financial leverage. It indicates how much debt a company is using to finance its assets relative to the value of shareholders’ equity. As of January 31, 2024, Smith & Wesson Brands, Inc. (SWBI) debt-to-equity ratio is 2.31. This ratio is calculated by dividing the total liabilities by the total stockholders equity.

Generally, a high debt-to-equity ratio (above 1.0) suggests that a company relies more on debt, which can increase financial risk. Conversely, a lower ratio indicates a more conservative approach with less reliance on debt. The debt-to-equity ratio can vary significantly across industries. It’s useful to compare Smith & Wesson Brands, Inc. (SWBI) ratio to the average ratio of companies in the consumer discretionary sector to gauge whether it is high or low.

Recent Debt Activities

Recent financial activities, such as debt issuances and refinancing, provide insights into how Smith & Wesson Brands, Inc. (SWBI) is managing its capital structure. Key activities include:

• On October 4, 2023, Smith & Wesson Brands, Inc. (SWBI) announced that it had repaid $25 million on its Term Loan A credit facility. Following this payment, the outstanding balance on the Term Loan A was $125 million.
• The company's credit agreements contain several financial covenants, including a maximum total leverage ratio and a minimum interest coverage ratio. As of January 31, 2024, Smith & Wesson Brands, Inc. (SWBI) was in compliance with all these covenants.

Balancing Debt and Equity

Smith & Wesson Brands, Inc. (SWBI) strategically balances debt and equity to optimize its capital structure. Debt financing can provide leverage and potential tax benefits, as interest payments are tax-deductible. However, high levels of debt can also increase financial risk, particularly during economic downturns, because of the fixed obligations of debt service. Equity financing, on the other hand, does not require fixed payments and can provide a buffer during challenging times, but it can dilute existing shareholders' ownership.

Here’s a summary of Smith & Wesson Brands, Inc. (SWBI) debt and equity composition as of January 31, 2024:

Smith & Wesson Brands, Inc. (SWBI) actively manages its debt and equity to maintain financial flexibility and support its strategic objectives. Monitoring these elements is essential for investors to understand the company's financial health and risk profile.

Learn more about Smith & Wesson Brands, Inc. (SWBI): Exploring Smith & Wesson Brands, Inc. (SWBI) Investor Profile: Who’s Buying and Why?

Smith & Wesson Brands, Inc. (SWBI) Liquidity and Solvency

Analyzing Smith & Wesson Brands, Inc.'s (SWBI) financial health requires a close look at its liquidity and solvency, which indicate the company's ability to meet its short-term and long-term obligations. Let's explore some key metrics and trends based on the latest available data.

Assessing Smith & Wesson Brands, Inc.'s (SWBI) Liquidity:

Liquidity ratios provide insights into a company's ability to cover its short-term liabilities with its short-term assets. Here's how Smith & Wesson Brands, Inc. (SWBI) measures up:

• Current Ratio: The current ratio is calculated by dividing current assets by current liabilities. A higher current ratio generally indicates better liquidity.
• Quick Ratio: The quick ratio, also known as the acid-test ratio, excludes inventory from current assets to provide a more conservative measure of liquidity. This ratio assesses a company's ability to meet its short-term obligations with its most liquid assets.

Analysis of Working Capital Trends:

Working capital, the difference between a company's current assets and current liabilities, is a measure of its short-term financial health. Monitoring trends in working capital can reveal whether a company is efficiently managing its short-term resources.

Cash Flow Statements Overview:

Cash flow statements provide a detailed look at how a company generates and uses cash. There are three main categories:

• Operating Cash Flow: Cash generated from the company's core business activities.
• Investing Cash Flow: Cash used for investments in assets, such as property, plant, and equipment.
• Financing Cash Flow: Cash flow related to debt, equity, and dividends.

Analyzing these trends helps investors understand how Smith & Wesson Brands, Inc. (SWBI) is managing its cash and whether it is generating enough cash to sustain its operations and growth.

Potential Liquidity Concerns or Strengths:

Based on the analysis of liquidity ratios, working capital trends, and cash flow statements, it’s important to identify any potential liquidity concerns or strengths. For example, a declining current ratio or negative operating cash flow could signal potential liquidity issues, while a strong cash position and increasing working capital could indicate financial strength.

Explore more about Smith & Wesson Brands, Inc. (SWBI) investor profile: Exploring Smith & Wesson Brands, Inc. (SWBI) Investor Profile: Who’s Buying and Why?

Smith & Wesson Brands, Inc. (SWBI) Valuation Analysis

Assessing whether Smith & Wesson Brands, Inc. (SWBI) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst opinions. The following analysis provides insights based on available data and market trends.

Price-to-Earnings (P/E) Ratio: The P/E ratio is a fundamental metric used to determine if a stock's price is high relative to its earnings. As of the latest data, Smith & Wesson Brands, Inc. shows a P/E ratio that needs to be compared against industry averages and historical P/E ratios to ascertain whether it signals overvaluation or undervaluation. For example, if the current P/E ratio is significantly higher than its historical average or the average of its peers, it might suggest the stock is overvalued. Conversely, a lower P/E ratio could indicate undervaluation.

Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. A lower P/B ratio can suggest that the stock is undervalued because it means that the investor is paying less for each dollar of net asset value. Reviewing Smith & Wesson Brands, Inc.'s P/B ratio in comparison to its competitors and historical data can provide further insights into its valuation. If Smith & Wesson Brands, Inc.'s P/B ratio is lower than its peers, it could signal an undervaluation.

Enterprise Value-to-EBITDA (EV/EBITDA): The EV/EBITDA ratio is used to assess the overall value of a company compared to its earnings before interest, taxes, depreciation, and amortization (EBITDA). This ratio is particularly useful because it takes into account a company’s debt, making it a more comprehensive valuation measure than the P/E ratio. A lower EV/EBITDA multiple may indicate that a company is undervalued, while a higher multiple may suggest overvaluation. To determine whether Smith & Wesson Brands, Inc. is overvalued or undervalued, its EV/EBITDA should be benchmarked against industry standards and historical averages.

Stock Price Trends: Analyzing the stock price trends of Smith & Wesson Brands, Inc. over the past 12 months (or longer) provides a view of market sentiment and historical performance. Recent trends may reflect company-specific developments, broader market conditions, or industry-related factors. A consistent upward trend might suggest growing investor confidence, while a downward trend could indicate concerns about the company's prospects. These trends, combined with other valuation metrics, contribute to a more informed valuation assessment.

Dividend Yield and Payout Ratios: For investors seeking income, dividend yield and payout ratios are important indicators. The dividend yield represents the annual dividend payment as a percentage of the stock price, indicating the return on investment from dividends alone. The payout ratio shows the proportion of earnings paid out as dividends. A high dividend yield might make the stock attractive, but it’s essential to ensure the payout ratio is sustainable, indicating the company's ability to maintain dividend payments. Examining these metrics for Smith & Wesson Brands, Inc. helps assess its appeal to income-seeking investors and the sustainability of its dividend policy.

Analyst Consensus: Analyst consensus provides a summarized view of professional opinions on a stock's valuation and future performance. These ratings typically range from 'buy' to 'sell,' reflecting analysts' recommendations based on their assessments of the company's prospects. A consensus of 'buy' ratings suggests that analysts generally believe the stock is undervalued and has potential for appreciation, while 'sell' ratings indicate the opposite. It’s important to consider analyst consensus as one of many factors in the valuation process, rather than relying on it as the sole determinant.

Understanding a company's mission, vision, and core values can also provide context for its strategic direction and long-term potential. For more insights, refer to Mission Statement, Vision, & Core Values of Smith & Wesson Brands, Inc. (SWBI).

Smith & Wesson Brands, Inc. (SWBI) Risk Factors

Smith & Wesson Brands, Inc. (SWBI) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges highlighted in their filings.

Here's a breakdown:

• Industry Competition: The firearms industry is intensely competitive. Smith & Wesson faces pressure from other manufacturers, importers, and retailers, all vying for market share.
• Regulatory Changes: The firearms industry is heavily regulated at the federal, state, and local levels. Changes in these regulations could restrict the sale, distribution, or manufacture of firearms, impacting Smith & Wesson's revenue and profitability.
• Market Conditions: Demand for firearms can be volatile and influenced by factors such as economic conditions, political events, and social trends. A downturn in demand could lead to decreased sales and financial challenges for the company.

Operational, financial, and strategic risks are detailed in Smith & Wesson's recent earnings reports and filings. These include:

• Product Liability: Smith & Wesson faces the risk of product liability claims arising from the use of its firearms. These claims can be costly to defend and could result in significant financial judgments against the company.
• Inventory Management: Managing inventory levels is crucial in the firearms industry. Overstocking can lead to obsolescence and markdowns, while understocking can result in lost sales.
• Brand Reputation: Maintaining a positive brand reputation is essential for Smith & Wesson's success. Negative publicity, whether related to product safety, marketing practices, or other issues, could damage the company's brand and impact sales.

Mitigation strategies that Smith & Wesson may employ include:

• Product Innovation: Investing in research and development to create new and innovative firearms products can help Smith & Wesson differentiate itself from competitors and maintain market share.
• Compliance Programs: Implementing robust compliance programs to ensure adherence to all applicable laws and regulations can help mitigate regulatory risks.
• Risk Management: Developing and implementing comprehensive risk management strategies can help the company identify, assess, and mitigate potential risks to its business.

For more insights into Smith & Wesson Brands, Inc., consider exploring: Mission Statement, Vision, & Core Values of Smith & Wesson Brands, Inc. (SWBI).

Smith & Wesson Brands, Inc. (SWBI) Growth Opportunities

For Smith & Wesson Brands, Inc. (SWBI), several factors could influence its future growth prospects. These include new product innovations, expansion into new markets, strategic acquisitions, and the ability to maintain a competitive edge.

Analysis of key growth drivers:

• Product Innovations: Continued investment in research and development to introduce new firearms and related products that meet evolving consumer demands and preferences.
• Market Expansion: Exploring opportunities to expand into international markets or new segments within the existing market, such as the law enforcement or security sectors.
• Acquisitions: Strategic acquisitions of complementary businesses or technologies to broaden product offerings or enhance manufacturing capabilities.

Future revenue growth projections and earnings estimates are subject to various market conditions and company-specific factors. For example, according to the most recent data, Smith & Wesson's fiscal year 2024 saw net sales of $479.8 million, a decrease from $719.4 million the previous year. This reflects a challenging market environment, but also sets the stage for potential recovery and growth if market conditions improve. Factors influencing these projections include consumer spending, regulatory changes, and competition within the firearms industry.

Strategic initiatives and partnerships that may drive future growth:

• Partnerships: Collaborating with other companies in the outdoor recreation or defense industries to develop joint products or marketing programs.
• Direct-to-Consumer Sales: Expanding direct-to-consumer sales channels through online platforms or company-owned retail stores to improve margins and customer engagement.

Smith & Wesson's competitive advantages that position the company for growth:

• Brand Recognition: Leveraging the company's strong brand reputation and heritage to attract and retain customers.
• Manufacturing Capabilities: Maintaining efficient and flexible manufacturing operations to respond quickly to changing market demands.
• Distribution Network: Utilizing a well-established distribution network to reach a wide range of customers, including retailers, distributors, and government agencies.

The financial performance for the fiscal year 2024 shows a gross profit of $178.5 million, or 37.2% of net sales, and an adjusted gross profit of $180.9 million, or 37.7% of net sales. Despite market headwinds, these figures demonstrate the company's ability to maintain profitability through cost management and strategic pricing.

Here’s a look at some key financial data:

For further insights into Smith & Wesson Brands, Inc. (SWBI) financial health, you can refer to this resource: Breaking Down Smith & Wesson Brands, Inc. (SWBI) Financial Health: Key Insights for Investors