AXIL

We rate Axil Brands, Inc. (AXIL) as a Reduce with a composite score of 49.3/100 at a current price of $6.15. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (74th percentile) and value (56th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (25th percentile) and momentum (31th percentile) tempers our overall conviction. We assign a Narrow Moat rating (48/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Axil Brands, Inc. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 49.3/100 places it at rank #2111 in our full 7,333-stock universe. At $46M in market capitalization, Axil Brands, Inc. is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 5%, though momentum at the 31th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 70% (+27.1pp vs sector) narrow to operating margins of 9% (+7.3pp vs sector) and net margins of 7.5%, yielding a gross-to-net conversion rate of 11%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $6.15, Axil Brands, Inc. is trading near fair value based on current fundamentals. Our value factor score of 56/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 16.6x (a 25% discount to the sector median of 22.3x), EV/EBITDA of 13.7x (near the sector median), P/B of 3.4x, P/S of 1.3x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to Axil Brands, Inc.. The company exhibits strong financial stability with a beta of 0.60, conservative leverage (1% D/E), and a stability factor in the 45th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.60 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 45th percentile and quality factor at the 74th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 70% provide a buffer against cost pressures; conservative leverage (1% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Axil Brands, Inc.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 20.3%, disciplined leverage (1% D/E). Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Axil Brands, Inc. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 13.9% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Axil Brands, Inc. receives a Reduce rating with a composite score of 49.3/100 (rank #2111 of 7,333). Our quantitative framework assigns a Narrow Moat (48/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 46/100.

Our analysis does not support a constructive view on Axil Brands, Inc. at this time. The combination of the current quantitative profile, low uncertainty, and exemplary capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.