Smith & Wesson Brands (SWBI) stock has made a tremendous recovery this year amid soaring sales of firearms. On Monday SWBI’s Relative Strength (RS) Rating shot to 92, crossing a key threshold.
Over 100 years of market history reveals that the best stocks typically have an 80 or higher RS Rating at the beginning of a new run. Although the company’s RS Rating is top-notch, other indicators need work. The company’s adequate-but-not-great 71 EPS Rating reflects weaker profit growth last year and early this year.
Smith & Wesson Ratings Mixed
Smith & Wesson also boasts a strong 92 Composite Rating. IBD’s Composite Rating combines five separate proprietary ratings of fundamental and technical performance into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
However, its C Accumulation/Distribution Rating, on an A+ to E scale shows that roughly as many funds and other large institutions are selling shares as buying.
There’s no denying though that the company has put up spectacular numbers over the past three quarters. During that period earnings per share grew 119%, 999% and 999% on a year-over-year basis. Sales grew 33%, 141% and 119% in those periods.
On Smith & Wesson’s latest earnings news call on Dec. 3, CEO Mark Smith said, “Today, I am pleased to report a second consecutive record-breaking quarter for our 168-year-old company.”
Additionally, Smith & Wesson generated $49.1 million in net income, repaid a revolving loan and ended with $55.5 million cash on hand and zero debt for the Oct. 31-ended quarter.
The iconic gun maker earns the No. 2 rank among its peers in the Security/Safety industry group. Axon Enterprise (AAXN), maker of Taser stun guns and wearable camera and digital video storage systems, is the top-ranked stock in the group.
Smith & Wesson was down fractionally Monday afternoon. Axon Enterprise also slid less than 1%.
Looking For Winning Stocks? Try This Simple Routine
IBD 50 stock Smith & Wesson is now considered extended and out of buy range after clearing an 8.50 buy point in a first-stage consolidation. See if the stock forms a new pattern or follow-on buying opportunity like a three weeks tight or pullback to the 50-day or 10-week moving average.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength. This unique rating measures market leadership by using a 1 (worst) to 99 (best) score that indicates how a stock’s price performance over the past 52 weeks matches up against all other stocks in our database.
YOU MIGHT ALSO LIKE:
IBD Stock Rating Upgrades: Rising Relative Strength
Why Should You Use IBD’s Relative Strength Rating?
How Relative Strength Line Can Help You Judge A Stock
Find Top Stocks Near A Buy Point With IBD Leaderboard