Amidst a volatile market, Axon Enterprise Inc (AXON, Financial) experienced a daily decline of 6.05%, although maintaining a 3-month gain of 7.79%. With an Earnings Per Share (EPS) of $1.95, investors may wonder if the stock is fairly valued. This article delves into Axon Enterprise's valuation, providing a comprehensive analysis to address this question. Read on for an insightful exploration of the company's intrinsic value and financial standing.
Company Introduction
Axon Enterprise Inc (AXON, Financial) is at the forefront of developing and manufacturing conducted energy devices and cloud-based digital evidence management software. Serving law enforcement, military, and personal defense markets, Axon Enterprise operates through two main segments: Taser and software & sensors. With a significant revenue stream from the United States, the company's current stock price is $215.7, against a GF Value of $236.5, suggesting a need for a closer look at its fair market valuation.
Summarize GF Value
The GF Value is a unique metric representing the intrinsic value of a stock, combining historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. When a stock's price aligns closely with the GF Value Line, it is considered fairly valued. Axon Enterprise's market cap stands at $16.20 billion, with the stock's current price suggesting that it is trading at a fair value. This alignment indicates that the long-term return of its stock is likely to mirror the rate of business growth.
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Financial Strength
Investing in companies with robust financial strength is crucial to avoid capital loss. Axon Enterprise's cash-to-debt ratio of 1.67 positions it well within the Aerospace & Defense industry, earning a financial strength ranking of 7 out of 10 from GuruFocus. This indicates a sound balance sheet that could reassure potential investors.
Profitability and Growth
Profitability is a key indicator of a company's financial health. Axon Enterprise has shown consistent profitability over the past decade. With a revenue of $1.50 billion and an Earnings Per Share (EPS) of $1.95, along with an operating margin of 9.17%, the company's profitability ranks favorably within its industry. Additionally, Axon Enterprise's impressive 3-year average revenue growth rate surpasses that of 87.17% of its industry peers, indicating robust growth prospects.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC) offers insight into its profitability relative to the capital invested. Axon Enterprise's ROIC of 8.7 is currently below its WACC of 11.96, suggesting that the company needs to improve its capital efficiency to generate higher returns for investors.
Conclusion
Overall, Axon Enterprise (AXON, Financial) stock appears to be fairly valued. The company exhibits a fair financial condition and profitability, with growth rates that are among the highest in the Aerospace & Defense industry. For a more detailed financial overview, Axon Enterprise's 30-Year Financials are available here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
