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Axon Enterprise (AAXN) Gains But Lags Market: What You Should Know

Zacks Equity Research
In the latest trading session, Electronic Arts (EA) closed at $87.50, marking a -1.89% move from the previous day.

In the latest trading session, Axon Enterprise (AAXN) closed at $55.74, marking a +0.45% move from the previous day. The stock lagged the S&P 500's daily gain of 0.64%. Elsewhere, the Dow gained 0.7%, while the tech-heavy Nasdaq added 0.91%.

Heading into today, shares of the maker of stun guns and body cameras had gained 14.58% over the past month, outpacing the Industrial Products sector's gain of 6.31% and the S&P 500's gain of 4.16% in that time.

Investors will be hoping for strength from AAXN as it approaches its next earnings release, which is expected to be February 26, 2019. The company is expected to report EPS of $0.11, down 38.89% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $104.69 million, up 10.6% from the year-ago period.

Investors should also note any recent changes to analyst estimates for AAXN. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. AAXN is holding a Zacks Rank of #1 (Strong Buy) right now.

Investors should also note AAXN's current valuation metrics, including its Forward P/E ratio of 60.91. This valuation marks a premium compared to its industry's average Forward P/E of 18.1.

We can also see that AAXN currently has a PEG ratio of 2.44. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Security and Safety Services stocks are, on average, holding a PEG ratio of 1.77 based on yesterday's closing prices.

The Security and Safety Services industry is part of the Industrial Products sector. This group has a Zacks Industry Rank of 100, putting it in the top 40% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow AAXN in the coming trading sessions, be sure to utilize Zacks.com.


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