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Did The Underlying Business Drive Axon Enterprise's (NASDAQ:AAXN) Lovely 385% Share Price Gain?

Simply Wall St

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Long term investing can be life changing when you buy and hold the truly great businesses. And highest quality companies can see their share prices grow by huge amounts. To wit, the Axon Enterprise, Inc. (NASDAQ:AAXN) share price has soared 385% over five years. If that doesn't get you thinking about long term investing, we don't know what will. It's also good to see the share price up 27% over the last quarter.

View our latest analysis for Axon Enterprise

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over half a decade, Axon Enterprise managed to grow its earnings per share at 8.0% a year. This EPS growth is lower than the 37% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 124.08.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

NasdaqGS:AAXN Past and Future Earnings, May 3rd 2019

We know that Axon Enterprise has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Axon Enterprise will grow revenue in the future.

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 37%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before spending more time on Axon Enterprise it might be wise to click here to see if insiders have been buying or selling shares.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.