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Axon Enterprise (AAXN) Q4 Earnings: What's in the Cards?

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Axon Enterprise, Inc. will release fourth-quarter 2017 results on Feb 27, after market close.

Last quarter, the company reported a negative earnings surprise of 80%. However, in the trailing four quarters, the company recorded an average positive surprise of 15.61%. Let’s see how things are shaping up for this announcement.

Factors to Consider

Axon Enterprise is a renowned supplier of smart weapons and body-worn video cameras in the security and public safety space. Keeping with this trend, the company won a number of orders for its smart weapons from various police departments in the fourth quarter of 2017. Some of the company’s notable buyers in the fourth quarter include Arkansas State Police, Charlotte-Mecklenburg Police Department, North Carolina State Highway Patrol, North Las Vegas Police Department and more than a dozen of State Police Departments along with a few Federal agencies. Such a massive rise in orders is expected to boost sales.

In line with this, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $87.9 million, reflecting 7.1% annual improvement. Moreover, during the third-quarter earnings call, management at Axon Enterprise raised its sales growth expectation for 2017 from the range of 15-20% to 25%. This indicates solid sales growth in the fourth quarter as well.

On the flip side, higher operating expenses have been weighing on the bottom line. Notably, management expects Axon Enterprise to incur $1 million in costs during the fourth quarter in relation to its migration from Amazon Web services to Microsoft Azure's governing cloud. Overall, the company’s fourth-quarter operating expenses are expected to rise 5-8% sequentially.

Thus, we may expect Axon Enterprise’s upcoming results to reflect signs of deterioration in its bottom line. Evidently, the Zacks Consensus Estimate for fourth-quarter loss stands at 3 cents, representing a 125% year-over-year plunge.

Earnings Whisper

Our proven model does not conclusively show an earnings beat for Axon Enterprise this quarter. Notably, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, Axon Enterprise lacks both these attributes, as mentioned below:

Zacks ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Axon Enterprise carries a Zacks Rank #3, which increases the power of surprise prediction. However, a 0.00% Earnings ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Axon Enterprise, Inc. Price and EPS Surprise

 

Axon Enterprise, Inc. Price and EPS Surprise | Axon Enterprise, Inc. Quote

 

Recent Peer Releases

Allegion plc’s (ALLE - Free Report) fourth-quarter 2017 adjusted earnings came in at $1.11 per share, beating the Zacks Consensus Estimate of 94 cents. Adjusted earnings were up a significant 37% from the prior-year quarter.

Fortune Brands Home & Security, Inc. kept its earnings streak alive in the fourth quarter of 2017, with earnings before charges/gains of 80 cents per share beating the Zacks Consensus Estimate of 79 cents by 1.3%. Also, the bottom line improved 13% from the year-ago tally of 71 cents.

Upcoming Peer Release

Alarm.com Holdings, Inc. (ALRM - Free Report) is expected to release quarterly results on Feb 27. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average earnings beat being 65.4%. It carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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