What happened
Shares of ammunition manufacturer Ammo, Inc. (POWW 4.29%) -- the company that sounds like a Looney Tunes villain -- lived up to their ticker name today. In 3 p.m. EDT trading, Ammo stock exploded higher by a lucky 7.7%.
Credit for the stock price rise comes from two sources: investment bank Lake Street Capital, which raised its price target on Ammo stock to $12 today; and Ammo, Inc., itself -- which inspired the upgrade with a bang-up earnings report on Monday.
Image source: Getty Images.
So what
Let's begin with those earnings. For the first quarter of its fiscal year 2022, Ammo reported earning a net profit of $0.08 per share on "record net revenues" of $44.5 million, thus beating analyst forecasts on both the top and bottom lines. (Analysts had forecast Ammo would earn $0.06 per share, pro forma. On that non-generally accepted accounting principles (GAAP) basis, Ammo earned $0.13 per share -- twice what was expected.)
Ammo had lost money on both a GAAP and a pro forma basis in the previous fiscal year's Q1, so this year's Q1 was definitely an improvement. And revenue-wise, sales grew 360% year over year, which surely added to shareholder satisfaction.
Now what
In a note covered by TheFly.com, Lake Street responded to this good news by hiking its price target on Ammo stock by $1 to $12 a share and maintaining its "buy" recommendation on the stock.
Lake Street noted that Ammo is already benefiting from its Gunbroker.com acquisition. Announced in February, that deal didn't close until April but has already contributed "over $12 million of high-margin Marketplace revenue," noted Ammo CEO Fred Wagenhals. Looking ahead, Lake Street predicts that Ammo will work to reduce costs and scale this Gunbroker business, improving its profits along the way -- and Ammo seems to agree.
For fiscal 2022, the company is now projecting it will book revenues between $190 million to $210 million -- more than triple its 2021 haul -- and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $65 million to $70 million. No wonder its shareholders are smiling.
