TIVP025: Smith & Wesson (SWBI): Deep Value — Locked and Loaded w/ Daniel Mahncke & Shawn O’Malley
Shawn O’Malley and Daniel Mahnke break down Smith & Wesson (ticker: SWBI), an iconic firearms manufacturer with 170+ years of history. Smith & Wesson is no compounder, though. It’s an okay business, at best, but Shawn and Daniel want to determine whether this often-overlooked stock is cheaply priced.
In this episode, you’ll learn how Smith & Wesson has navigated the volatile sales cycle in firearms, what factors can drive the biggest swings in firearms sales, whether Smith & Wesson’s juicy dividend is sustainable, the biggest political and legal risks facing this company, what famous investor owns the stock, how Smith & Wesson shares can help an investor hedge societal disruptions, and whether Smith & Wesson is attractively valued on a normalized earnings basis plus so much more!
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IN THIS EPISODE, YOU’LL LEARN
00:00 - Intro
02:47 - The historic origins behind this company that predates the Civil War.
06:12 - Why “Sin” stocks can offer attractive returns from discounted valuations.
10:54 - What drives Smith & Wesson’s business.
23:17 - How the company navigates a range of factors that can impact it, from regulation to litigation, that are largely beyond its control.
35:17 - How the company’s relocation of its headquarters has added to its financial stress.
46:11 - The biggest challenges of investing in a “mean reversion” bet like Smith & Wesson.
01:01:15 - Whether Shawn & Daniel add SWBI to The Intrinsic Value Portfolio.
01:05:38 - Why Smith & Wesson may be a hedge against societal disruptions.
And much, much more!
*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.
BOOKS AND RESOURCES
Get smarter about valuing businesses in just a few minutes each week through our newsletter, The Intrinsic Value Newsletter.
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2022 Value Investors’ Club Pitch of Smith & Wesson.
Link to Smith & Wesson’s 2024 annual filing.
Chit Chat Stocks’ coverage of Smith & Wesson
Check out our previous Intrinsic Value breakdowns: Nintendo, Airbnb, AutoZone, Alphabet, Ulta, John Deere, and Madison Square Garden Sports.
Check out the books mentioned in the podcast here.
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