Smith & Wesson Holding Corporation (SWHC) Undervalued On Long-Term Prospects

Gun(g) ho
The company trades at just 8.12 times forward earnings — odd for a stock projected to grow at nearly 30% for five years. One of its competitors, Sturm, Ruger & Company (NYSE:RGR), is a larger company and set to grow slower, yet trades at more than 15 times forward earnings.

Concern seems to be that the gun-buying frenzy is over. That may be true in the short to medium term, but there is little evidence of a long-term drop-off in the firearm market. Even if Smith & Wesson Holding Corporation (NASDAQ:SWHC)’s earnings growth was more akin to the industry’s 13%, that still provides plenty of upside given its current valuation.

Though not the most socially conscious stock to own, or even in the top 500, Smith & Wesson Holding Corporation (NASDAQ:SWHC) is a seemingly cheap stock with strong potential for capital appreciation and multiple correction over the long term.

The article Smith & Wesson Undervalued On Long-Term Prospects originally appeared on Fool.com and is written by Michael Lewis.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool owns shares of Sturm, Ruger & Company.

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