Axon Enterprise, Inc. (AAXN - Free Report) can currently be considered a smart choice for investors seeking exposure in the security and safety services industry. Solid product offerings and pipeline, technological advancement, healthy international business, and no long-term debt are the major tailwinds for the company.
The Scottsdale, AZ-based company currently carries a Zacks Rank #2 (Buy). It belongs to the Zacks Security and Safety Services industry, which belongs to the broader Zacks Industrial Products sector. The industry currently is among the top 26% (with a rank of 65) of more than 250 Zacks industries.
Below we discussed why it is worth investing in Axon.
Healthy Performance and Top-Line Tailwinds: The company performed well in the last reported quarter, with earnings and sales surpassing estimates by 122.22% and 11.1%, respectively. Notably, sales in the quarter expanded 27% from the year-ago quarter. Geographically, businesses strengthened in Canada, the U.K. and Australia. Latin America and Asia too added to sales growth.
The company seems well-positioned to gain from its technological expertise, strength in the core market, efforts to introduce products and expansion in customer base. Also, the popularity of the company’s body cameras and TASER 7 as well as diversification in the manufacturing footprint and supply chain will likely aid.
Performance Indicators & Revenue Consensus: In the first quarter of 2020, the company’s annualized recurring revenues of $174 million increased 7.8% sequentially and 42.2% on a year-over-year basis. Also, future contracted revenues in the first quarter grew 3.6% sequentially and 37% year over year to $1.3 billion. The company anticipates that realizing 20-25% of future contracted revenues in the coming 12 months. These performance indicators are positive signs for Axon.
The Zacks Consensus Estimate for Axon’s revenues is pegged at $131.9 million for the second quarter, $605.2 million for 2020 and $699.3 million for 2021. These estimates suggest year-over-year growth of 17.4% for the second quarter, 14% for 2020 and 15.5% for 2021.
Liquidity and Leverage Position: Exiting the first quarter of 2020, Axon had cash and cash equivalents of $156.5 million, while its short-term investments were $188.7 million. On the contrary, the company had zero debt balance exiting the first quarter. Healthy liquidity and no leverage will likely help it effectively deal with the pandemic.
Share Price & Earnings Estimate Trend: We believe that impressive financial results must have helped drive sentiments for the stock. Notably, the company’s shares have gained 42.1% in the past three months. Notably, the industry grew 45.3% during the same timeframe, while the S&P 500 rose 37.7%.
Also, the Zacks Consensus Estimate for Axon’s earnings is pegged at 17 cents for the second quarter, $1.19 for 2020 and $1.38 for 2021. These estimates reflect no change from the 60-day-ago figures. Notably, on a year-over-year basis, the estimates suggest growth of 21.4% for the second quarter, 14.4% for 2020 and 15.8% for 2021.
Axon Enterprise, Inc Price and Consensus