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What's in Store for Axon Enterprise's (AAXN) Q3 Earnings?
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Axon Enterprise, Inc. is scheduled to report third-quarter 2020 results on Nov 5, after the closing bell.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter total sales is pegged at $150.3 million, suggesting growth of 15% from the prior-year quarter. The consensus mark for earnings per share currently stands at 20 cents, indicating a plunge of 29% from the year-ago reported figure. Notably, the figure has remained stable over the past 30 days.
Q2 Performance
Axon reported a quarterly loss of 1 cent per share against the Zacks Consensus Estimate of 16 cents. Notably, the company had reported earnings of 14 cents per share in the prior-year quarter. Revenues declined 4% year over year to $141 million. However, the top line beat the Zacks Consensus Estimate.
The company beat estimates in two of the trailing four quarters, while missing the same twice. It has a trailing four-quarter earnings surprise of 124.3%, on average.
Axon's core business remains robust and healthy, and it has been witnessing strong growth in international revenues, which can be attributed to targeted investments in sales channel expansion. Notably in second-quarter 2020, international revenues grew 80% following an improvement of 38% in the first quarter. The company has been witnessing increasing orders from corrections departments and international markets, including the U.K, Australia, Canada and new markets comprising Indonesia, Brazil, Panama, Thailand, India and Chile, among others. This might have contributed to the company’s third-quarter performance.
In third-quarter 2020, bookings for body cameras remained strong in the domestic markets. The company has been witnessing a shift in demand for its latest generation device — TASER 7 — from legacy devices. Further, the company’s third-quarter performance might have benefited from demand for Axon Cloud software offerings and Axon Body 3 — its latest generation camera that features LTE-connectivity and location-based services.
Last year, the company had taken actions to diversify supply chain and global manufacturing footprint owing to the implementation of tariffs. It has enhanced its inventory as a proactive approach to minimize shipping disruptions and thus, shipped critical core products without any significant interruption despite the COVID-19 pandemic. This has led to some major U.S city police departments placing bulk orders for Axon products. Further, order levels for Axon’s products have been increasing owing to reduction of sharing among officers in order to curb the spread of coronavirus. Meanwhile, a small number of agency customers have delayed their body camera programs, or postponed their subscription upgrades until unspecified later dates.
However, the company had entered into some contracts that carry lower margin to prioritize its Cloud user base growth and adding nodes to network in the early days of its Software and Sensors business. Further, majority of its multi-year contracts come with hardware refreshes at periodic intervals that carry lower margins than the Software as a Service (SaaS) portion of these contracts. These headwinds are likely to get reflected in the third-quarter results.
What Our Model Unveils
Our proven model does not conclusively predict a beat for Axon this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Axon’s Earnings ESP is 0.00%.
Zacks Rank: Axon currently has a Zacks Rank #4 (Sell).
Price Performance
Shares of the company have gained 34.9% year to date, against the industry’s decline of 4.4%.
Stocks Poised to Beat Earnings Estimates
Here are some Industrial Products stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.
Flowserve Corporation (FLS - Free Report) , currently a Zacks #2 Ranked stock, has an Earnings ESP of +2.56%.
ParkerHannifin Corporation (PH - Free Report) has a Zacks Rank #2 and an Earnings ESP of +5.44%, at present.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
What's in Store for Axon Enterprise's (AAXN) Q3 Earnings?
Axon Enterprise, Inc. is scheduled to report third-quarter 2020 results on Nov 5, after the closing bell.
Q3 Estimates
The Zacks Consensus Estimate for third-quarter total sales is pegged at $150.3 million, suggesting growth of 15% from the prior-year quarter. The consensus mark for earnings per share currently stands at 20 cents, indicating a plunge of 29% from the year-ago reported figure. Notably, the figure has remained stable over the past 30 days.
Q2 Performance
Axon reported a quarterly loss of 1 cent per share against the Zacks Consensus Estimate of 16 cents. Notably, the company had reported earnings of 14 cents per share in the prior-year quarter. Revenues declined 4% year over year to $141 million. However, the top line beat the Zacks Consensus Estimate.
The company beat estimates in two of the trailing four quarters, while missing the same twice. It has a trailing four-quarter earnings surprise of 124.3%, on average.
Axon Enterprise, Inc Price and EPS Surprise
Axon Enterprise, Inc price-eps-surprise | Axon Enterprise, Inc Quote
Factors to Note
Axon's core business remains robust and healthy, and it has been witnessing strong growth in international revenues, which can be attributed to targeted investments in sales channel expansion. Notably in second-quarter 2020, international revenues grew 80% following an improvement of 38% in the first quarter. The company has been witnessing increasing orders from corrections departments and international markets, including the U.K, Australia, Canada and new markets comprising Indonesia, Brazil, Panama, Thailand, India and Chile, among others. This might have contributed to the company’s third-quarter performance.
In third-quarter 2020, bookings for body cameras remained strong in the domestic markets. The company has been witnessing a shift in demand for its latest generation device — TASER 7 — from legacy devices. Further, the company’s third-quarter performance might have benefited from demand for Axon Cloud software offerings and Axon Body 3 — its latest generation camera that features LTE-connectivity and location-based services.
Last year, the company had taken actions to diversify supply chain and global manufacturing footprint owing to the implementation of tariffs. It has enhanced its inventory as a proactive approach to minimize shipping disruptions and thus, shipped critical core products without any significant interruption despite the COVID-19 pandemic. This has led to some major U.S city police departments placing bulk orders for Axon products. Further, order levels for Axon’s products have been increasing owing to reduction of sharing among officers in order to curb the spread of coronavirus. Meanwhile, a small number of agency customers have delayed their body camera programs, or postponed their subscription upgrades until unspecified later dates.
However, the company had entered into some contracts that carry lower margin to prioritize its Cloud user base growth and adding nodes to network in the early days of its Software and Sensors business. Further, majority of its multi-year contracts come with hardware refreshes at periodic intervals that carry lower margins than the Software as a Service (SaaS) portion of these contracts. These headwinds are likely to get reflected in the third-quarter results.
What Our Model Unveils
Our proven model does not conclusively predict a beat for Axon this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Axon’s Earnings ESP is 0.00%.
Zacks Rank: Axon currently has a Zacks Rank #4 (Sell).
Price Performance
Shares of the company have gained 34.9% year to date, against the industry’s decline of 4.4%.
Stocks Poised to Beat Earnings Estimates
Here are some Industrial Products stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.
AGCO Corporation (AGCO - Free Report) has an Earnings ESP of +6.07% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Flowserve Corporation (FLS - Free Report) , currently a Zacks #2 Ranked stock, has an Earnings ESP of +2.56%.
ParkerHannifin Corporation (PH - Free Report) has a Zacks Rank #2 and an Earnings ESP of +5.44%, at present.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>