Both Smith & Wesson Holding (NASDAQ:SWBI) and TASER International (NASDAQ:AXON) sell personal defense products into the consumer and professional markets, but one leans heavily in one direction while the other goes into the other, and that may make all the difference in the world.

Yet where Smith & Wesson's stock is essentially flat since the start of the year, TASER shares have gained more than 39% in 2016. So let's see which personal defense stock makes the better buy.

Image source: Flickr via Tac6 Media.

Smith & Wesson's advantages

The iconic gunslinger has enjoyed outsize demand for its firearms among a public fearful of greater gun-control efforts and desirous of protecting themselves, their families, and the property. Net sales have surged 51% over the first half of its fiscal year, with firearms sales 53% higher in that period.

But firearms are no longer the sole story with Smith & Wesson, as it has detoured sharply into the extreme outdoors market with its purchase of Battenfeld Technologies in 2014, a move that led to acquiring suppliers such as knife maker Taylor Brands and laser-sight manufacturer Crimson Trace, as well as survivalistgear maker Ultimate Survival Technologies. Yet sales there are sluggish as most of its customers are looking to buy a gun at the moment and not tricking it out with bells and whistles.

Still, at an estimated $60 billion, the extreme outdoors market is about four times as large as the firearms market and not subject to the same swings in demand that afflict guns. Smith & Wesson is enjoying boom times at the moment, but the ardor for firearms will eventually cool, and it's putting in place a growth plan that will smooth out the volatility. It's still a nascent business for the gunslinger at the moment, representing just 12% of total revenues, but management sees substantial opportunities in the future and just won shareholder approval to change the holding company's name from Smith & Wesson to American Outdoor Brands to better reflect the broad array of products it now sells. (Its firearms will still be sold under the Smith & Wesson brand.)

Image source: Flickr via Marcelo Freixo.

TASER International's advantages

TASER, of course, is synonymous with the stun-gun market, and since 1994, more than 850,000 of its conducted electrical weapons have been sold to more than 18,000 law enforcement agencies across the country. The company estimates that its devices are deployed at the rate of over 900 times per day, or once every two minutes. Yet like Smith & Wesson, TASER's focus is changing from its weapons to ancillary businesses such asd cameras and evidence-management software.

Where its weapons still account for the bulk of its net sales, or 86% of the total for the first three quarters of 2016, its Axon division is experiencing substantial growth, in fact expanding at twice the rate of TASER weapons. The weapons division saw sales jump nearly 25%, but sales of cameras and software surged 60% across the first nine months compared with last year.

TASER is also trying to smooth out the bumps inherent in its weapons sales, and as more departments adopt stun guns as a first line of defense with less than lethal options, future growth rates dim. Sales of police body cameras, however, and software and tools to manage the large and growing body of evidence collected by the devices, provides not only another avenue of growth, but also a steady stream of recurring revenues.

Smith & Wesson disadvantages

Although Smith & Wesson is the leading gunmaker, sales are often subject to the whims of the political climate, and its stock tumbled following the November elections, as it was assumed the catalysts for buying a gun in a Donald Trump administration were significantly reduced than they would have been during a Hillary Clinton presidency.

Smith & Wesson and peer Sturm, Ruger (NYSE:RGR) have said they see no let-up in gun buyer demand, and important factors beyond gun-control legislation probably play into gun purchases that aren't being considered, though they remain present still.

Image source: Getty Images.

Moreover, it's entering into a new field of business that it doesn't have much experience in, one that is just as crowded, if not more so, than the firearms industry. Going after well-established peer Vista Outdoors (NYSE:VSTO), even if they are similarly positioned, will be no easy task. Sales there may also be subject to certain consumer whims that may not make Smith & Wesson's volatility lessen. It's also unknown just what impact, if any, the corporate name change will have on business in either of its fields of pursuit.

TASER International disadvantages

While Smith & Wesson faces a crowded field of rivals, gun buyers can easily own a S&W, a Glock, and a Sig Sauer handgun; they're not mutually exclusive. That's not the case with TASER's weapons and cameras. Police departments typically hand out contracts to one manufacturer, and competition is fierce to win them.

Moreover, the manufacturers are forever suing each other over patent infringement. The body-camera market is especially susceptible, with TASER and rival Digital Ally going after one another over various design features. The small upstart recently accused its bigger rival of infringing on an auto-activation feature, whereby TASER's cameras turn on when a police vehicle's light bar is activated. TASER shot back that it had already developed the concept years prior.

Image source: Taser International.

But TASER apparently just lost a patent argument to PhaZZer Electronics, which said all of TASER's 262 patents for its X26 model stun gun and variants that represent 64% of weapons sales and 47% of total sales, were invalid. That was the reason behind TASER's recently plunging stock.

The verdict

Although these two companies sell personal defense products (albeit largely into different markets), both are also pursuing new lines of business that could open up new avenues of growth for them. They are therefore more alike than different, and the forces facing them are similar as well, making them pretty equally matched up.

The difference, then, comes down to valuation. Smith & Wesson trades at just 9 times trailing earnings and 10 times next year's estimates; TASER goes off at 79 and 48 times, respectively, certainly making the gunmaker significantly undervalued compared with the market and the industry.

Where the discount is even more apparent is when comparing how their respective enterprise values match up against their free cash flow. Smith & Wesson's EV trades at an extremely discounted 7 times FCF, while TASER's EV is premium priced at 35 times its FCF. In short, the scales tip in favor of Smith & Wesson Holding as the better buy to TASER International.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.