Is Smith & Wesson Brands, Inc. overvalued or undervalued?

As of 18 June 2025, the valuation grade for Smith & Wesson Brands, Inc. has moved from attractive to very attractive. The company is currently undervalued, with a P/E ratio of 22, which is lower than the peer average of approximately 23.19 for similar companies. Additionally, the EV to EBITDA ratio stands at 11.69, which is competitive compared to peers like Ducommun, Inc. with a ratio of 14.70, indicating a favorable valuation position.
In terms of financial performance, Smith & Wesson's ROE is 8.73% and ROCE is 7.57%, suggesting decent returns on equity and capital employed. The dividend yield of 3.49% also adds to its attractiveness for investors seeking income. Despite recent stock performance lagging behind the S&P 500, with a year-to-date decline of 14.05% compared to a 2.44% increase in the index, the underlying valuation metrics suggest that the stock presents a compelling buying opportunity at its current price of 8.69.