With the business potentially at an important milestone, we thought we'd take a closer look at AMMO, Inc.'s (NASDAQ:POWW) future prospects. Ammo, Inc. designs, develops, manufactures, markets, and sells ammunition and ammunition component products for use in handguns and long guns in the United States and internationally. On 31 March 2021, the US$931m market-cap company posted a loss of US$7.8m for its most recent financial year. The most pressing concern for investors is AMMO's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 2 industry analysts covering AMMO, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$42m in 2022. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 88% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of AMMO's upcoming projects, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 5.3% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of AMMO which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at AMMO, take a look at AMMO's company page on Simply Wall St. We've also compiled a list of important factors you should look at:
- Historical Track Record: What has AMMO's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on AMMO's board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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