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"We rate SMITH & WESSON HOLDING CORP (SWHC) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 38.47% is the gross profit margin for SMITH & WESSON HOLDING CORP which we consider to be strong. Regardless of SWHC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.65% trails the industry average.
- SWHC, with its decline in revenue, underperformed when compared the industry average of 5.2%. Since the same quarter one year prior, revenues fell by 22.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- SMITH & WESSON HOLDING CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SMITH & WESSON HOLDING CORP increased its bottom line by earning $1.47 versus $1.22 in the prior year. For the next year, the market is expecting a contraction of 52.4% in earnings ($0.70 versus $1.47).
- The debt-to-equity ratio of 1.10 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, SWHC has managed to keep a strong quick ratio of 2.03, which demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: SWHC Ratings Report
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