Is AMMO, Inc. overvalued or undervalued?

As of 14 February 2023, the valuation grade for AMMO, Inc. has moved from expensive to risky, indicating a significant shift in its perceived value. The company appears to be overvalued given its current financial metrics, particularly with a Price to Book Value of 0.52 and an EV to EBITDA ratio of -3.87, which suggests that the company is not generating positive earnings before interest, taxes, depreciation, and amortization. Additionally, the Return on Capital Employed (ROCE) stands at -19.52%, further highlighting the challenges the company faces in generating returns.
In comparison to its peers, AMMO, Inc. has a notably lower EV to EBITDA ratio than Smith & Wesson Brands, Inc., which has an EV to EBITDA of 13.0213, indicating that AMMO is struggling significantly in profitability metrics. Furthermore, Kaman Corp. is classified as very expensive with a P/E ratio of 120.2573, showcasing a stark contrast in valuation. The recent stock performance shows that AMMO, Inc. has underperformed against the S&P 500 over multiple periods, particularly with a 3-year return of -58.79% compared to the S&P 500's 70.41%, reinforcing the notion that the stock is currently overvalued.