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Why Ammo Stock Just Popped

By Rich Smith - Mar 2, 2021 at 12:02PM

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Do you like long-range sales forecasts? Then this is your lucky day.

What happened

Ammunition manufacturer Ammo (POWW 2.28%) is kind of an odd duck in the investing world. Not because of its field of business -- I've got nothing against ammo makers -- but because of the strange way in which it doles out its financial projections and its actual financial results.

This first became apparent back in January, when Ammo pre-announced a "500% increase" in sales for its fiscal 2021 third quarter (which ended Dec. 31) ... then followed that up with a prediction for a 317% increase in sales for its fiscal Q4 ... only to eventually report the official earnings for fiscal Q3 more than a month later.

Given the company's penchant for issuing guidance and results so out of order, I suppose we shouldn't be too surprised to see that it's doing it again.

Long row of ammunition of various calibers

Image source: Getty Images.

So what

Specifically, on Tuesday morning -- with almost a month to go before it's even finished with its fiscal Q4 2021, mind you -- Ammo looked ahead and told investors what to expect for its next fiscal year. Management advises that anticipated $120 million in revenue for fiscal 2022, with "adjusted EBITDA" of $20 million.  

Both numbers would amount to triple-digit-percentage growth, points out CEO Fred Wagenhals. The market accepted that news with enthusiasm-- shares of Ammo were trading 5% higher as of noon EST.

Now what

So investors are happy, but should they be? On the one hand, personally, I'd be more comfortable seeing how Ammo did through the end of its fiscal 2021 before looking ahead to think about fiscal 2022. That being said, $120 million in sales next year would be triple the $40 million Ammo generated over the last four (officially reported) quarters.

That's a great growth rate. If Ammo can deliver on it -- and maybe earn a profit this time, too? -- investors should be pleased.

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