Smith & Wesson Stock Receives Bullish Call Following Earnings Beat

Smith & Wesson Brands US8317541063

Shares of Smith & Wesson Brands have been upgraded to a "Buy" recommendation by the research firm Wall Street Zen. This optimistic shift in sentiment arrives after the firearms manufacturer released quarterly results that surpassed profit forecasts, even as revenue declined, creating a divided view among investors.

The company's latest financial report, issued on December 4, served as the catalyst for the revised rating. Smith & Wesson posted earnings per share (EPS) of $0.04, soundly beating the consensus estimate of $0.02. This profitability was achieved against a backdrop of falling sales, however, with quarterly revenue coming in at $124.67 million. This figure represents a 3.9% decrease compared to the same period last year.

Despite closing Friday's session down 1.55% at $10.83, the equity has demonstrated significant momentum, climbing approximately 29% over the preceding four weeks.

A Market Divided on Prospects

The investment community remains split in its assessment of Smith & Wesson's trajectory. The bullish case, reinforced by the recent upgrade, highlights the company's resilience and ability to deliver profits that exceed expectations in a challenging operating climate.

A contrasting, more cautious perspective persists. An analysis from StockStory dated December 11 advised selling the stock, pointing to a pattern of long-term revenue contraction. According to their data, sales have declined at an annualized rate of 10.2% over the past five years, raising legitimate questions about sustainable growth. The report also noted a relatively low free-cash-flow margin of 2.1% as an area of concern.

Current valuation metrics underscore this uncertainty. The stock trades at a price-to-earnings (P/E) ratio near 57, indicating a premium relative to current earnings. Its price-to-sales (P/S) ratio stands at 1.1, roughly aligning with the median for the U.S. leisure industry.

Technical Levels and Shareholder Return

For income-focused shareholders, a key date is approaching. Smith & Wesson has declared a dividend of $0.13 per share, with an ex-dividend date set for Thursday, December 18, 2025. This distribution equates to a dividend yield of about 4.79%.

From a chart perspective, technical analysts identify nearby support levels at $10.92 and $10.74. Immediate price resistance is seen at $11.25; a sustained move above this threshold would be necessary to continue the multi-month upward trend. Meanwhile, the average price target among analysts tracked by MarketBeat is $11.00, accompanied by a consensus rating of "Hold."