Shares of AML3D Ltd (ASX: AL3) have skyrocketed in the last month, prompting many to wonder what's behind the rapid ascent.
At the time of writing, shares in the emerging ASX defence player are swapping hands at 18.5 cents apiece, a rise of more than 160% in the last month.
Stock prices are typically based on fundamentals, such as a company's sales or earnings. But we do know that from time to time, stocks can fly on other catalysts, such as market-sensitive announcements.
With this meteoric rise in such a short time, many are asking, is AML3D profitable? Here's a look.
Why the sudden interest in AML3D shares?
This Adelaide-based company, which specialises in metal 3D printing for the defence sector, has made several announcements in recent months, which have resulted in enormous growth in the value of AML3D shares.
The company has been busy in the last year, securing a series of lucrative contracts. It most recently sold its 2600 Edition ARCEMY system to Laser Welding Solutions, which supports the US Navy, for $1.1 million.
This builds on another US Department of Defense contract for $1.5 million it secured earlier in the year.
Moreover, the company recently received a $1.12 million grant from the South Australian Economic Recovery Fund to advance its proprietary metal 3D printing technology
Arguably, these developments further cement its reputation in this highly specialised field.
But while these updates are great for AML3D shares, what does it mean for the actual business's profitability?
The company reported more than 935% sales growth in its half-year results. Revenues grew to $1.5 million, up from just $147,115 the year prior.
Gross profit – which is considered sales minus costs of goods sold – came to $714,000 for the half. But stock prices aren't sensitive to gross profits. It's the after-tax earnings that matter.
After all costs and operating expenses, AL3MD's net loss after tax was $3.4 million, or 1.4 cents per share, versus negative 1.3 cents per share in H1 FY23.
As such, ALM3D is not currently profitable.
Financials and future outlook
Looking ahead, there could be reasons to be optimistic about AML3D shares, particularly through its expansion into the US defence sector and ongoing technological advancements.
The company is focused on expanding its footprint with the US Navy and military. ALM3D CEO Sean Ebert said there were many opportunities to do this.
He said "continuing momentum" was driving the company's US growth. As such, it is looking at opportunities in "the Navy's submarine industrial base, but also across US-based, global Tier 1 Oil & Gas, Marine and Aerospace companies".
Foolish takeaway
Investors intrigued by AML3D's recent performance and its moves in the defence sector might view the stock as a speculative growth opportunity.
However, it's crucial to stay aware of the inherent risks. This is especially true for companies like ALM3D, which are still navigating their path to profitability.
As always, consider your personal investment strategy and consult with a financial advisor if needed.
