Today we’re going to take a look at the well-established Axon Enterprise, Inc. (NASDAQ:AXON). The company’s stock saw a decent share price growth in the teens level on the NASDAQGS over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Axon Enterprise’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Axon Enterprise
What’s The Opportunity In Axon Enterprise?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 0.3% below my intrinsic value, which means if you buy Axon Enterprise today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $200.76, then there isn’t much room for the share price grow beyond what it’s currently trading. What’s more, Axon Enterprise’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of Axon Enterprise look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Axon Enterprise’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? AXON’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on AXON, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it’s equally important to consider the risks facing Axon Enterprise at this point in time. Case in point: We’ve spotted 3 warning signs for Axon Enterprise you should be aware of.
If you are no longer interested in Axon Enterprise, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Valuation is complex, but we’re helping make it simple.
Find out whether Axon Enterprise is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
