AMMO, Inc. (NASDAQ: POWW, POWWP) reports earnings after the bell on Monday. What should investors expect? Record earning and bullish guidance.
After all, AMMO management has already given the clues, suggesting they will post a record best $55 million in revenues for in the quarter. What’s more, the markets have gotten even stronger since then, with the current administration in the states being the best gun sales team since the Barack Obama days. Thus, while POWW’s more than 16% gain in November is impressive, it may be the precursor for better things to come. Notably, on a more than $200 million run rate, that’s likely.
In fact, from the trading pattern over the past eight weeks, investors are indeed bullish. On Friday, shares are surging to two-month highs, reaching $7.29 intraday, a level not touched since the start of September. Moreover, volume indicates that investors are taking advantage of an apparent valuation gap, scooping up shares at higher prices and pace over the past two weeks. Investors may have good reasons to be bullish ahead of the call, especially after AMMO increased revenue guidance and included optimistic commentary heading into the quarter and for the remainder of 2021.
Their bullish posture stems from an expected doubling in some areas of production and a quadrupling in others. That’s good news when facing near-record demand for guns and ammunition. That’s not all.
Record-Setting Performance Expected
Demand is getting stronger after the U.S. recently put an embargo on Russian ammunition imports. Better still, enhanced integration of GunBroker.com to its sales mix is expected to add potentially exponential revenue-generating firepower. AMMO noted in its prior call that only about 3% of GunBroker revenues, about $12 million, came from the sale of ammunition. Hence, targeting that six million member base could lead to a substantial rise in revenues resulting in a massive return on its $190 million acquisition/investment.
Moreover, investors should get a detailed update on how AMMO can meet the record demand for its products. Of interest will be how AMMO benefits from consolidating manufacturing operations this past April in its Manitowoc, Wisconsin plant. Following up on past guidance, AMMO can add more details on how doubling its priming and loading capacity and increasing its brass manufacturing capacity by at least 15% will impact future revenue generation. Moreover, guidance may also include an update for planned additional production enhancements to meet an even sharper rise in demand.
Also of interest will be a discussion about AMMO’s penetration into the military markets. 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. Although revenue details may be embargoed for security reasons, investors should get a feel for how that contract can impact both near and long-term revenues. Military ammunition contracts can range from thousands to millions and well into the billions for specialized weaponry like AMMO provides.
Guidance in The Crosshairs
Also in the queue should be an update on how AMMO is doing on its wholesale and retail trade. As noted, its new facility is designed to quadruple production to meet demand from its presence in more than 1600 direct-to-consumer locations. Further, revenues are expected to increase currently and going forward from its combined $32 billion in sales opportunities from its core target markets, including military, sports, law enforcement, and retail markets.
Of course, investors will also pay attention to its financial condition. That’s expected to remain strong, with AMMO exiting last quarter in its best operational position in history. Hence, that metric may be even more robust with expected record sales combined with enhanced equipment, technology, and manufacturing strength.
Indeed, put the AMMO earnings call into your listening crosshairs. At a roughly $790 million valuation, there is considerable room for growth. And with AMMO, Inc. habitually beating its already revised-higher estimates, pulling the investment trigger ahead of the call may be a wise consideration. Record revenues supported by bullish guidance are usually not a sell-the-news event.
Conference Call details:
Monday, November 15th, 2021- 5:00pm est.
Investors interested in participating in the live conference call or audio-only webcast, may join by dialing 1-877-407-0789 (domestic), 1-201-689-8562 (international), or via webcast using the following link:
Please join at least 5-10 minutes prior to the scheduled start and follow the operator’s instructions. When requested, please ask for “AMMO, Inc. Fiscal Second Quarter 2022 Earnings Call.”
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