Could 5%-Yielding Smith & Wesson Stock Have 60%+ Upside?

SWBI Stock Up 16% Over Last Month
When it comes to stocks, people are more inclined to invest in some stocks and avoid others. So-called “sin stocks,” like gambling, tobacco, cannabis, adult entertainment, and aerospace and defense stocks are the kinds of companies that many investors avoid for ethical reasons.
Then there are other investors who want to make money regardless. And there is some evidence to support those who include sin stocks like Smith & Wesson Brands Inc (NASDAQ:SWBI) in their portfolios.
Despite the stigma of being unethical or socially dubious, many sin stocks are also excellent defensive plays that perform well whether the economy is growing or we’re in a recession. That’s because people will always spend money on alcohol and tobacco whether times are good or bad.
There may be negative public opinion regarding sin-stocks, but ultimately it’s up to investors to decide what they want in their portfolios.
And that’s where Smith & Wesson comes in. It might be in the aerospace & defense industry, but when it comes right down to it, most people think of it as a company that sells personal firearms. And they aren’t wrong.
The company designs, manufactures, and sells firearms. This includes pistols, revolvers, and long guns (modern sporting rifles, pistol caliber carbines, and lever-action rifles). It also sells handcuffs, suppressors, and other firearm-related products and accessories.
Smith & Wesson Reports Better-Than-Expected Fiscal Q1 Results
For the first quarter of fiscal 2026 ended July 31, 2025, Smith & Wesson announced that net sales slipped 3.7% on an annual basis to $85.1 million. That’s far better than management’s previous forecast of an expected 10% decline. (Source: “Smith & Wesson Brands, Inc. Reports First Quarter Fiscal 2026 Financial Results,” Smith & Wesson Brands Inc, September 4, 2025.)
The company reported a first-quarter net loss of $3.4 million, or a loss of $0.08 per share, compared to $1.9 million, or $0.04 per share, in the same prior-year period. Its adjusted net loss was $3.4 million, or $0.08 per diluted share, compared with $881,000, or $0.02 per diluted share, for the comparable quarter last year.
Gross margin was 25.9%, compared to 27.4% in the same prior year period.
Commenting on the results, Mark Smith, Smith & Wesson’s president and chief executive officer, commented, “First quarter results came in better than expected, reflecting robust demand for our new products and continued strong market share for our broader portfolio in every firearms category in which we compete.”
“Our performance during the seasonal slow period for firearms demonstrates the strength of our brand and the ongoing success of our innovation strategy. Innovation remains a cornerstone of our strategy, with new products accounting for 37.3% of sales in the first quarter.”
Looking ahead, management said that it expects a normal seasonal environment, resulting in second-fiscal quarter sales growing significantly over the first quarter, coming in approximately three to five percent below the second quarter of fiscal 2025.
Quarterly Dividend of $0.13/Share Maintained
Smith & Wesson has been around since 1852, but it’s only been paying a dividend since 2020, so it doesn’t have a long dividend history to hang its hat on. With that said, in that short period of time, it has raised its dividend four times, from $0.05 per share to $0.13 per share.
The company paid a quarterly dividend of $0.13 per share on October 2. This works out to an annual distribution of $0.52 per share, for a forward dividend yield of 5.05%. That dividend yield is more than twice the current rate of inflation.
SWBI Stock Could Soar 60%+
Now, a dividend of five percent might not sound that big, but it’s attached to a stock that has been outpacing the broader market over the last few months.
Investors responded favorably to Smith & Wesson’s better-than-expected first-quarter results, sending SWBI stock up more than 25%. It has held onto those gains since then.
Despite the big moves, SWBI has bigger upside in the cards, with Wall Street analysts providing a 12-month share price forecast range of $12.00 to $16.00. This points to potential upside of approximately 21% to 61%.

Chart courtesy of StockCharts.com
The Lowdown on Smith & Wesson Brands Inc
A sin stock like Smith & Wesson Brands may not be for everybody, but it’s a great company for investors who like strong earnings and a reliable, growing dividend.
The company reported better-than-expected first-quarter results with strong sales coming from new products, which accounted for 37.3% of sales, and a big increase in core handgun shipments.
Those tailwinds should persist, with a strong pipeline of new products. That should be good news for both retail investors and the 237 institutional investors that hold 53.8% of all outstanding SWBI shares. Those institutions not scared off of sin stocks include BlackRock Inc, Dimensional Fund Advisors LP, Vanguard Group Inc, and Goldman Sachs Group Inc. (Source: “Smith & Wesson Brands, Inc. (SWBI),” Yahoo! Finance, last accessed October 21, 2025.)