Critical Contrast: Funko (NASDAQ:FNKO) versus Smith & Wesson Brands (NASDAQ:SWBI)

Smith & Wesson Brands (NASDAQ:SWBI) and Funko (NASDAQ:FNKO) are both small-cap consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Profitability

This table compares Smith & Wesson Brands and Funko’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smith & Wesson Brands	4.44%	6.60%	4.59%
Funko	-0.21%	2.61%	0.71%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Smith & Wesson Brands and Funko, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smith & Wesson Brands	0	2	1	0	2.33
Funko	1	2	1	0	2.00

Smith & Wesson Brands presently has a consensus price target of $16.50, suggesting a potential upside of 25.23%. Funko has a consensus price target of $7.08, suggesting a potential upside of 12.88%. Given Smith & Wesson Brands’ stronger consensus rating and higher probable upside, research analysts clearly believe Smith & Wesson Brands is more favorable than Funko.

Earnings & Valuation

This table compares Smith & Wesson Brands and Funko”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smith & Wesson Brands	$523.84 million	1.13	$18.48 million	$0.54	24.40
Funko	$908.21 million	0.39	-$67.36 million	($0.04)	-156.88

Smith & Wesson Brands has higher earnings, but lower revenue than Funko. Funko is trading at a lower price-to-earnings ratio than Smith & Wesson Brands, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Smith & Wesson Brands has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, Funko has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500.

Insider & Institutional Ownership

59.3% of Smith & Wesson Brands shares are held by institutional investors. Comparatively, 99.2% of Funko shares are held by institutional investors. 2.3% of Smith & Wesson Brands shares are held by insiders. Comparatively, 3.9% of Funko shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Smith & Wesson Brands beats Funko on 9 of the 13 factors compared between the two stocks.

About Smith & Wesson Brands

Smith & Wesson Brands, Inc. is a holding company, which engages in the manufacture, design, and provision of firearms. Its portfolio includes handguns, long guns, handcuffs, suppressor, and other firearm-related products. The firm’s brands are Smith & Wesson, M&P, Thompson/Center Arms, and Gemtech. The company was founded by Horace Smith and Daniel Baird Wesson in 1852 and is headquartered in Maryville, TN.

About Funko

Funko, Inc., a pop culture consumer products company, designs, sources, and distributes licensed pop culture products in the United States, Europe, and internationally. The company provides media and entertainment content, including movies, television (TV) shows, video games, music, and sports; figures, handbags, backpacks, wallets, apparel, accessories, plush products, homewares, and digital non-fungible tokens; and art prints and vinyl records, posters, soundtracks, toys, books, games, and other collectibles. It markets its products under the Pop!, Loungefly, Funko, Mystery Minis, Bitty Pop!, Funko action figures, Funko Plush, and Funko Soda brand names; and licenses its properties under the classic evergreen, movie release, current TV, and current video game categories. The company sells its products through specialty retailers, mass-market retailers, e-commerce sites, and distributors; and at specialty licensing and comic book shows, conventions, and exhibitions, as well as through its e-commerce business. Funko, Inc. was incorporated in 2017 and is headquartered in Everett, Washington.