It might be of some concern to shareholders to see the Axon Enterprise, Inc. (NASDAQ:AAXN) share price down 13% in the last month. But that doesn’t change the fact that the returns over the last three years have been very strong. The share price marched upwards over that time, and is now 275% higher than it was. To some, the recent share price pullback wouldn’t be surprising after such a good run. If the business can perform well for years to come, then the recent drop could be an opportunity.
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
During the three years of share price growth, Axon Enterprise actually saw its earnings per share (EPS) drop 55% per year.
So we doubt that the market is looking to EPS for its main judge of the company’s value. Therefore, we think it’s worth considering other metrics as well.
It may well be that Axon Enterprise revenue growth rate of 21% over three years has convinced shareholders to believe in a brighter future. If the company is being managed for the long term good, today’s shareholders might be right to hold on.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on Axon Enterprise
A Different Perspective
We’re pleased to report that Axon Enterprise shareholders have received a total shareholder return of 44% over one year. That gain is better than the annual TSR over five years, which is 28%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It’s always interesting to track share price performance over the longer term. But to understand Axon Enterprise better, we need to consider many other factors. For example, we’ve discovered 2 warning signs for Axon Enterprise that you should be aware of before investing here.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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