Stock Analysis & Valuation Outdoor Holding Company - 8.75% Series A Cumulative Redeemable Perpetual Preferred Stock (POWWP)

• Previous Close: $24.18
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	40.98	69
Intrinsic value (DCF)	9.38	-61
Graham-Dodd Method		n/a
Graham Formula	61.17	153

Strategic Investment Analysis

Company Overview

AMMO, Inc. (NASDAQ: POWWP) is a leading designer, producer, and marketer of innovative ammunition and ammunition component products catering to sport shooters, hunters, home defense users, law enforcement, and military agencies. The company’s flagship products include STREAK Visual Ammunition, which allows shooters to track bullet trajectories, and Stelth Subsonic ammunition optimized for suppressed firearms. AMMO, Inc. also owns GunBroker.com, a premier online marketplace for the lawful sale of firearms, ammunition, and shooting accessories. With a diverse product portfolio—ranging from Jesse James self-defense ammunition to tactical armor-piercing rounds—AMMO, Inc. serves a broad customer base across recreational, commercial, and defense sectors. Headquartered in Scottsdale, Arizona, the company operates in the high-growth aerospace & defense industry, leveraging technological innovation and e-commerce expansion to strengthen its market position.

Investment Summary

AMMO, Inc. presents a high-risk, high-reward investment opportunity due to its dual focus on ammunition manufacturing and e-commerce (via GunBroker.com). The company’s revenue growth potential is supported by strong demand in recreational shooting and defense markets, but its negative net income (-$15.6M in FY 2024) and diluted EPS (-$0.16) raise concerns about profitability. AMMO’s beta of 1.32 indicates higher volatility than the broader market, appealing to aggressive investors. Key strengths include its ownership of GunBroker.com, a sticky platform with recurring revenue, and proprietary ammunition technologies like STREAK. However, regulatory risks in the firearms industry and competitive pressures could weigh on margins. Operating cash flow ($32.6M) and a solid cash position ($55.6M) provide liquidity, but investors should monitor debt levels ($13.1M) and capex efficiency.

Competitive Analysis

AMMO, Inc. competes in the fragmented ammunition and firearms marketplace by differentiating itself through innovation (e.g., STREAK ammunition) and vertical integration (ownership of GunBroker.com). Its competitive advantage lies in proprietary product lines tailored to niche segments, such as subsonic and visual-tracking ammunition, which are less commoditized than standard rounds. The GunBroker.com platform provides a defensible moat, as it is one of the largest online firearm auction sites, creating synergies with AMMO’s manufacturing business. However, the company faces intense competition from established players like Vista Outdoor and Olin Corporation, which benefit from economies of scale and broader distribution networks. AMMO’s smaller scale limits its pricing power, and its reliance on the U.S. market exposes it to regulatory shifts. Strategic partnerships with law enforcement/military could enhance its positioning, but execution risks remain given its recent net losses.

Major Competitors

• Vista Outdoor Inc. (VSTO): Vista Outdoor is a market leader in ammunition (Federal, Remington brands) and outdoor recreation products, with far greater scale and diversified revenue streams than AMMO. Its strengths include strong brand recognition and distribution reach, but it faces cyclical demand and regulatory scrutiny. Unlike AMMO, Vista lacks a dedicated e-commerce platform like GunBroker.com.
• Olin Corporation (OLN): Olin dominates the ammunition market through its Winchester brand, benefiting from decades of military/law enforcement contracts. Its strengths include low-cost production and global reach, but it is less innovative in niche segments like subsonic or visual ammunition compared to AMMO. Olin’s broader chemicals business diversifies risk but dilutes focus on shooting sports.
• Sturm, Ruger & Co. (RGR): Ruger is a leading firearms manufacturer with a loyal customer base, but it relies heavily on rifle/pistol sales rather than ammunition. Its strengths include robust manufacturing capabilities, but it lacks AMMO’s e-commerce asset (GunBroker.com) and specialized ammunition IP. Ruger’s conservative product lineup may limit growth in tactical/defense markets.
• Smith & Wesson Brands, Inc. (SWBI): Smith & Wesson is a firearms-focused competitor with strong brand equity in handguns and rifles. Like Ruger, it does not emphasize ammunition production, giving AMMO an edge in bundled offerings. Smith & Wesson’s direct-to-consumer sales channel competes indirectly with GunBroker.com, but it lacks AMMO’s proprietary ammunition technologies.