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NEW YORK (TheStreet) -- Smith & Wesson Holding (SWHC) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SMITH & WESSON HOLDING CORP (SWHC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and generally higher debt management risk."
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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 4.8%. 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.
- Net operating cash flow has significantly decreased to -$14.21 million or 385.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Leisure Equipment & Products industry. The net income has significantly decreased by 70.3% when compared to the same quarter one year ago, falling from $16.99 million to $5.05 million.
- You can view the full analysis from the report here: SWHC Ratings Report