On Friday, Smith & Wesson Brands Inc. (NASDAQ:SWBI) shares saw its price target increased by Lake Street Capital Markets from $16.00 to $18.00, while the firm maintained a Buy rating on the stock.
The revision follows the company's release of its fourth-quarter fiscal year 2024 results, which surpassed analyst expectations and consensus on both revenue and earnings.
The firearms manufacturer reported a robust sales performance, citing the successful launch of new products, higher handgun volumes, and significant growth in long gun sales.
The average selling price (ASP) for both handguns and long guns exceeded forecasts, contributing to the strong results, despite a 6.3% drop in adjusted National Instant Criminal Background Check System (NICS) checks.
Smith & Wesson's consolidated ASP edged up to approximately $467, a slight increase from $463 the previous year and a significant rise from $298 in the same quarter of fiscal 2020. While the company anticipates a seasonal decline in ASPs during a typically slower first quarter, it expects demand to pick up in the Fall leading up to the election.
The company's gross margin for the quarter was reported at 35.5%, surpassing the estimate of 32.8%. This improvement was attributed to easing inflationary pressures and better absorption of fixed costs.
Smith & Wesson also posted an adjusted earnings per share (EPS) of $0.45, beating the analyst's estimate of $0.34, and an adjusted EBITDA of $36.0 million, higher than the anticipated $31.9 million.
The new price target of $18 is based on a 7.5x multiple applied to the revised fiscal year 2025 adjusted EBITDA estimate of $106.9 million. This target adjustment reflects a positive outlook on the company's financial performance and market position.
InvestingPro Insights
Following the upbeat fourth-quarter results from Smith & Wesson Brands Inc. (NASDAQ:SWBI), the company's financial health and market sentiment can be further illuminated by recent data and insights. According to InvestingPro, Smith & Wesson has demonstrated a commitment to shareholder value with a consistent increase in dividends, raising them for 4 consecutive years. Additionally, the company's stock is known for its low price volatility, which might appeal to investors seeking stability in their portfolios.
InvestingPro data highlights a market capitalization of $746.48 million and a Price/Earnings (P/E) ratio of 19.07, which suggests the company is being traded at a fair valuation relative to its earnings. Furthermore, the company's solid revenue growth of 6.55% in the last quarter and a gross profit margin of nearly 30% underscore the robust financial performance that Lake Street Capital Markets' revised price target seems to anticipate.
For investors looking for more in-depth analysis and additional insights, InvestingPro offers further tips on Smith & Wesson, including the company's moderate level of debt and predictions of profitability this year. To explore these valuable tips, readers can visit InvestingPro. Moreover, by using the coupon code PRONEWS24, new subscribers can enjoy an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a total of 7 additional InvestingPro Tips that could inform their investment decisions.
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