Smith & Wesson's Downward Spiral: 3 Reasons to Avoid and 1 Stock to Buy Instead

Smith & Wesson's stock price has dropped 24.5% since February 2025 due to softer quarterly results. The company's revenue has fallen at a 2.2% annual rate over the last five years, EPS declined by 17.7%, and free cash flow has been negative. Despite a lower valuation multiple, Smith & Wesson doesn't pass the quality test, and investors may want to consider other stocks.

Smith & Wesson Brands Inc (SWBI) has experienced a significant decline in its stock price, dropping by 24.5% since February 2025. This downturn is largely attributed to softer quarterly results, with revenue falling at an annual rate of 2.2% over the last five years, EPS declining by 17.7%, and free cash flow remaining negative. Despite a lower valuation multiple, the company's performance has raised concerns among investors, who may want to consider alternative investment opportunities.

Technical Signals and Moving Averages

The technical signals for Smith & Wesson Brands Inc (SWBI) indicate a consolidation trend starting from August 1, 2025, with a total price change of +7.11%. The stock has experienced a strong bullish signal due to increased volume and price fluctuations, but the overall technical indicator signals lean more towards a neutral outlook in the mid-term [1].

Moving average analysis suggests a bearish trend, with 3 negative signals and 1 positive signal. The SMA_20 being below the SMA_60 indicates a strong bearish trend in the mid-term. Resistance is expected at $8.38 and $8.60, while support is expected at $7.66 and $7.43 [1].

Short Selling Analysis

The short sale ratio of Smith & Wesson Brands Inc (SWBI) as of August 11, 2025, is 20.33%, indicating a decrease in the price from $8.04 to $8.04. This ratio suggests a potential increase in risk in the coming days [1].

Price Forecast

Based on various predictive models, Smith & Wesson Brands Inc's stock price is expected to experience significant movement in the coming periods. The 1-day prediction estimates a price of $8.31, while the 1-week outlook suggests a value of $8.19. For the 1-month forecast, the stock is projected to be at $7.99. Looking further ahead, the 2026 projection estimates a value of $7.45, with a long-term 2030 forecast reaching $5.70 [1].

Seasonality Analysis

Historical data indicates that August is not an ideal month for investing in Smith & Wesson Brands Inc (SWBI), with a 42.86% probability of a positive return. In contrast, October offers the highest probability of positive returns at 78.57% [1].

Conclusion

Smith & Wesson Brands Inc's stock price has shown significant volatility and a bearish trend, with technical signals and moving averages indicating a weak performance. Despite a lower valuation multiple, the company's poor financial performance and negative cash flow have raised concerns among investors. Given these factors, it may be prudent for investors to consider alternative investment opportunities.

References

[1] https://intellectia.ai/stock/SWBI/forecast