What happened

Shares of ammunition manufacturer Ammo Inc. (NASDAQ:POWW) were down by 3.4% through 3 p.m. EST Tuesday, even though the company slightly beat expectations on earnings in its fiscal 2022 second quarter.

For the period, which ended Sept. 30, analysts had forecast that Ammo would report $0.10 per share for the quarter, but it actually earned $0.11 per share.  

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Image source: Getty Images.

So what

That profit of $0.11 per share, by the way, was a whole lot better than the $0.05 per share that it lost in the year-ago period. Moreover, sales continued to rush ahead like a runaway train, rising 408% year over year to $61 million -- and with gross profit margins rising an astonishing 3,230 basis points, Ammo had no trouble earning a profit this time around.  

Management confirmed that "momentum remains very strong across our entire business" and that, indeed, business even "accelerated in the second quarter with Ammunition revenue increasing 360%."

Now what

Accordingly, management was able to raise its guidance for the balance of fiscal 2022. It now predicts that revenues will be approximately $250 million for the fiscal year, and that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will hit $80 million.

However, this was no more than Wall Street was already looking for -- and maybe even a bit less. According to the latest data from S&P Global Market Intelligence, analysts are forecasting sales of $250 million, and EBITDA of more than $89 million.

Thus, the upshot: While Ammo beat expectations easily in its fiscal second quarter, it appears on course to miss Wall Street's current outlook for the next couple of quarters. Call it a hunch, but I suspect this is why the stock is down Tuesday.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.