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Summary of Operations
Smith and Wesson Brands, Inc. (SWBI) is an American manufacturer of firearms and related products. In addition to their titular brand, they own M&P and Gemtech.
They manufacture most of their own components but purchases some from third-parties (and are subject to supply chain disruptions through them). Every firearm is tested before shipment. Their goods primarily sold to distributors who then sell to retailers. Over 40% of their distributor sales come from just five customers. Increasingly, they utilize online marketing and retail for the sale of their products. Sales are seasonal and typically peak in the fourth fiscal quarter (before summer).
Strategy
SWBI aims to leverage its strong brands to dominate the firearms market. It recently spun off its non-firearm segments, paid off all of its existing debt with cash flows, and recently declared its first dividend. It intends to utilize its own cash generation for expansion of productive capacity and share repurchases.
With its non-firearms segments spun off, it aims to focus on the core firearms business, in order to streamline it and innovate its product line.
Growth and Future
Not troubled by debt, SWBI is investing in its production to better respond to spikes in demand. Recently, this caused it to realize higher profits, in spite a decline in overall revenues.
Gun sales have been up in recent years in response to political turmoil in the United States. Given the increasingly divisive nature of politics in the Republic, this trend is unlikely to change, and the purchase of firearms by concerned citizens at this level is likely a new norm.
Valuation
Growth Assumptions: 0%
Intrinsic Value Per Share: $28
Net Cash Per Share: $3
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