Smith & Wesson: Dividends And Share Buybacks Could Be At Risk (Rating Downgrade)

Tangerine Tan Capital
2.43K Followers
(8min)

Summary

  • Downgrading Smith & Wesson due to disappointing free cash flow and weak FY25 results, missing revenue and earnings estimates.
  • Rising inventory, declining cash reserves, and increased debt signal potential financial strain and risk to future dividends and buybacks.
  • The current valuation is too high given the lack of near-term growth, ongoing macroeconomic pressures, and execution challenges.
  • I remain long-term optimistic due to the strong brand, but caution short-term pain and possible dividend cuts ahead.

Smith and Wesson M & & P 9 Shield Pistole

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The Smith & Wesson Investment Thesis

Smith & Wesson (NASDAQ:SWBI) was frequently in the spotlight during last year's U.S. presidential election because the political parties have different views on gun control. Depending on who

This article was written by

Tangerine Tan Capital
2.43K Followers
My primary area of concentration will be on identifying companies of exceptional caliber, with a proven ability to reinvest capital for impressive returns. Targeting those with a market capitalization of less than $10 billion, affords ample opportunities for growth. The ideal scenario is for these companies to demonstrate a long-term capability of capital compounding, with a high enough compound annual growth rate to potentially deliver tenfold returns or even greater.My approach is to maintain a long-term perspective on these companies, as I believe this will generate higher returns compared to the market index, in a rapidly evolving investment landscape where short-term holdings are becoming increasingly prevalent.I primarily adopt a conservative investment strategy, but occasionally I may pursue opportunities with a favorable risk-reward ratio where the potential upside is substantial and downside is limited. These ventures are carefully considered and allocated a proportional amount within my portfolio to maintain overall stability.Bachelor's degree in finance and accounting All ideas and articles are provided for informational and educational purposes. Nothing contained herein is investment advice or should be construed as investment advice. All decisions that you make after reading our articles and reports are 100% your responsibility.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of SWBI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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