AMMO, Inc. Stock Compelling Ahead Of Earnings; Expected To Deliver Consecutive Record-Setting Financials (NASDAQ: POWW, POWWP)

With earnings season in full force, pay attention to AMMO, Inc. (NASDAQ: POWW, POWWP). Why? Because if history is a guide, they are about to deliver another set of record-setting earnings. Better still, beyond expectations for POWW to meet raised guidance of $55 million this quarter, investors will be paying attention to management's prior suggestion of the company being on track to reach upwards of $400 million by 2024. If they add more color to that proposition, shares could surge.

In fact, combining the expected surge in Q3 sales with robust guidance, there would be justification for AMMO's roughly $724 million market cap to become a launchpad for substantially bigger gains than the 5% posted since last week. Thus, ahead of what could be record-setting financials, getting ahead of this trade may be a wise consideration.

Frankly, savvy investors appear to be doing that. Shares have been trading about 7% higher since the start of the month. And the reasons for the bullishness are apparent. AMMO is doing the right things in the right markets at the right time.



Video Link: https://www.youtube.com/embed/DgRQLFQYp0A

Expecting A Surge In Revenues

Moreover, they are showing positive results from their efforts. An important indicator is obviously increasing its prior fiscal second-quarter revenue to $55 million for the period ending September 30, 2021. That's about 9% higher from where it was initially. While that update went under the radar during a turbulent period for the markets, the substance of what's at play keeps the value opportunity well intact.

The better news is that its raised guidance still doesn't accrue all of the value expected from its $190 million acquisition of GunBroker.com, the largest online marketplace serving the firearms and shooting sports industries. Revenue-generating opportunities from that six million member base alone can send revenues significantly higher. And it very well may.

A clue came from the company, which said its transaction activity at GunBroker.com is robust, even compared to last year's record-setting performance. Further, management was even more bullish in its commentary, saying that investors should not overlook the traction expected from its implementing initiatives to accelerate the growth, including engaging with manufacturers, distributors, and importers to expand the marketplace offerings. And with a history of delivering on guidance, it may be wise to follow that lead.

Better still, AMMO has the operational muscle to back up its optimistic guidance.

Demand From Public And Private Markets Surge

That's important. Further, when AMMO says that growth in its core ammunition business continues to be driven by strong underlying demand for its unique, high-performance products, a proper translation may mean "higher revenues."

And that would make sense after consolidating manufacturing operations this past April in its Manitowoc, Wisconsin plant. As a result of that move, AMMO said it now can at least double its priming and loading capacity and increase its brass manufacturing capacity by approximately 15%. Additional production enhancements are planned for operational deployment in the near term. Thus, AMMO is positioned to meet an even sharper rise in demand.

And remember, AMMO serves several distinct markets. In addition to its retail focus, potentially transformational product orders can come from the military. In fact, in September, AMMO announced being awarded a contract from the Irregular Warfare Technical Support Directorate (IWTSD), operating under the U.S. Department of Defense. That order is for AMMO to design and manufacture signature-on-target rounds (SoT) to support U.S. military operations. For obvious reasons, the size of these contracts is often kept from the public to not tip the government's hand on military weaponry. That's understandable.

But, while the contract dollars may be a secret, those that follow the sector and similar contracts know that the size of these contracts can quickly add up to billions of dollars. Better still, it's unlikely that super-specialized ammunition, like AMMO is developing, can be bid on by other suppliers. Mixing and matching artillery isn't the most common practice when servicing specialized weaponry. And this product is special.

In fact, it's state of the art, allowing warfighters the ability to see the impact of rounds fired from their weapon systems on a wider variety of targets, both day and night. The specialized SoT ammunition also allows the machine gunner to see bullet impacts without a visible signature in-flight to expose their firing location. For U.S. troops, this innovative ammo can be a life-saver.

Better yet, its advanced capability will increase survivability by reducing firing position identification and ultimately increasing lethality by supporting the shooter to place more rounds on target. In short, news of that contract should have sent valuations soaring.

But since it didn't, it keeps the investment proposition in the crosshairs.

Optimism Abounds In 2021-22

That contract adds to more revenue-generating firepower from AMMO's reported $238 million order backlog expected to turn into cash in Q3 and Q4. And with its enhanced manufacturing facility designed to increase capacity by nearly 4X, AMMO should have no problem winding down that backlog. Still, with demand at near-record levels, the excellent news is that the backlog will likely be replenished with new orders.

There's more excellent news there, too. Laws of supply and demand are making the market a "sellers" marketplace. Thus, already strong margins are expected to get even stronger. And presume that trend to continue after a Department of State order went into effect limiting all ammo-related imports from Russia. By the way, the DoS is doing more than limiting Russian imports; it has prohibited them entirely for at least the next 12-months. Thus, while the consumer gets squeezed, AMMO could benefit from an intensified revenue-generating tailwind.

Still, we haven't gotten to the best part, where the value from GunBroker.com can transform AMMO into a revenue-generating juggernaut. Why so optimistic? Because AMMO has noted that only about $12 million of high-margin marketplace revenue came through its Gunbroker.com acquisition last quarter. Expectations are for that number to surge in coming quarters.

That's likely, especially noting that the roughly six million active users at Gunbroker.com only contributed about 3% of its revenues from gun and ammunition sales. Part of that was not having a supplier at its side. Now, that's changed. Hence, with AMMO in the mix, an enormous revenue-generating opportunity is created by meeting Gunbroker user interest with production and direct-to-consumer capabilities. Expect that revenue contribution to increase significantly in the comping quarters.

New Facility Increases Production Capacity

Furthermore, AMMO has the means to meet considerable demand increases. Its new facility is designed to quadruple production to meet demand from its presence in more than 1600 direct-to-consumer locations. Keep in mind, AMMO isn't a small player as it is. They already expect to sell upwards of 750 million rounds of ammunition this year. And that's not including its newly awarded military contract that could exponentially increase those totals.

Better yet, as AMMO continues to integrate its Gunbroker.com asset, it can leverage being in its best position ever to capitalize on the combined $32 billion in sales opportunities from its core target markets. One more thing- AMMO, Inc. is American-owned and American-made. Hence, what's not to like about this company.

In fact, finding a single fault with AMMO is difficult due to record sales, highest ever profits, a backlog approaching $240 million, and a new facility that can quadruple production. The only part missing may be unsponsored analyst coverage, which could come soon. If so, putting peer multiples next to AMMO metrics could put AMMO on the path toward 52-week highs of $10.31. At those levels, it would fill the current valuation disconnect. But, forward-looking, it would just be a starting point.

Thus, as earnings approach, expect the momentum to build. The better news is that not only is attention well deserved, but investors can also take advantage of a stock that is truly undervalued. In days of massive multiples given to "maybe successful" companies, finding one like AMMO that actually deserves a raise is refreshing. It's also an opportunity.

Put simply, keep AMMO, Inc.'s stock in the crosshairs. In fact, with management a habitual deliverer of good news, it may be the best time ever to pull the investment trigger.

 

Disclaimers: Level3Trading is responsible for the production and distribution of this content. Level3Trading is not operated by a licensed broker, a dealer, or a registered investment adviser. It should be expressly understood that under no circumstances does any information published herein represent a recommendation to buy or sell a security. Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The information made available by Level3Trading is not intended to be, nor does it constitute, investment advice or recommendations. The contributors may buy and sell securities before and after any particular article, report and publication. In no event shall Level3Trading be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or made available by Level3Trading, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information in this video, article, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. Level3Trading strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Level3Trading was compensated up to five-thousand-dollars by a third-party to research, prepare, and syndicate written and visual content about Gourmet Provisions International Corp. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D. For some content, Level3Trading, its authors, contributors, or its agents, may be compensated for preparing research, video graphics, and editorial content. As part of that content, readers, subscribers, and website viewers, are expected to read the full disclaimers and financial disclosures statement that can be found at level3trading.com.

The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be forward looking statements. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as projects, foresee, expects, will, anticipates, estimates, believes, understands, or that by statements indicating certain actions & quote; may, could, or might occur. Understand there is no guarantee past performance will be indicative of future results.Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investors investment may be lost or impaired due to the speculative nature of the companies profiled.

Media Contact
Company Name: Hawk Point Media
Contact Person: Ken Kellis
Email: info@hawkpointmedia.com
Phone: 3057806988
City: Miami Beach
State: Florida
Country: United States
Website: https://ammoinc.com/


Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.