To keep profits up during periods of weak demand, the company uses its manufacturing capabilities to serve third parties, including machining and tooling work. The business is debt-free and holds over $100 million of cash on the books. Even with revenue expected to decline by 32% next year, analysts expect earnings per share to come in at $1.64, which would still put the P/E at a lowish 10. Smith & Wesson is built to handle adversity. The stock's forward price-to-earnings (P/E) ratio is dirt cheap at 6.1 times this year's earnings estimates. The stock price undershoots the value of the company's long-term earning power, especially its history of generating profits through the cyclical swings in demand. It works with 23,000 suppliers, and that variety has helped it overcome many of the world's ongoing supply chain problems. With $12.4 billion in trailing-12-month revenue, Wayfair has a fraction of what it says will be a $1.2 trillion market by 2030. It's already good at that, and as a more efficient company, it should be even better. If it can do that successfully, it will be well positioned to start operating profitably, and it can then begin to focus on capturing greater market share. The company is doing the hard work to cut costs, and CEO Niraj Shah said that it had "direct visibility to over half a billion dollars of savings" and the means to reach that goal in 2023. Repeat customers accounted for 77.8% of total orders, up from 76.3% last year, and average order value increased from $283 to $325. For starters, it has an active, loyal customer base of more than 22 million, which was the glimmer on an otherwise dark third-quarter earnings report. However, there are reasons to be confident that Wayfair can bounce back. But it's posting poorer performance than some of its peers, which is alarming. Wayfair is facing the same challenges as many other retailers, such as inflation, tough comps to beat from last year, and the need to cut costs after expanding quickly to meet heightened demand.
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