Is Axon a Smart Investment After Another Year of Double Digit Growth in 2025?

If you have been watching Axon Enterprise’s stock price lately and wondering whether now is the right time to get in, you are not alone. Over the past year, Axon’s share price has soared 97.5%, reflecting not just strong performance in the law enforcement tech space but also increasing investor confidence in the company’s long-term prospects. Looking further back, the numbers become even more eye-catching: 586.7% returns over three years and an impressive 777.4% over five years. That kind of growth does not go unnoticed, and it definitely gets people asking if the stock still has runway or if most of the upside is already priced in.

In the past week, the stock climbed another 3.6%, which hints at continued momentum amid positive market developments surrounding the tech sector and public safety investment themes. Even over the last month, Axon’s price is up 1.5%. Year to date, the gain stands at 30.4%. Taken together, the trajectory raises questions about what is driving the optimism and whether the current price makes sense given the fundamentals.

So how does Axon stack up from a valuation perspective? According to our assessment of six key checks for undervaluation, Axon scored a 0, meaning it is not undervalued by any of the common measures we track. But before you decide whether to buy, sell, or hold, let’s break down what those valuation checks actually mean and explore if traditional valuation really tells the whole story, or if there is a smarter way to judge Axon’s true worth. Stay tuned as we dig deeper into each approach, with a twist at the end you will not want to miss.

Axon Enterprise scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Axon Enterprise Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model is a widely used valuation tool that estimates what a company is worth today by projecting its future free cash flows and bringing those amounts back to the present using a discount rate. This helps investors determine whether a stock's current market price reflects its true intrinsic value based on underlying business performance, rather than just market sentiment.

For Axon Enterprise, the most recent trailing 12 months’ Free Cash Flow stands at $184.1 Million. Analyst projections and Simply Wall St’s extrapolations suggest robust growth, with expected Free Cash Flow reaching $2.1 Billion by 2035. Notably, analyst-sourced FCF estimates go out five years. After this period, growth is forecasted based on historical trends. These numbers highlight Axon's ambitious trajectory, but much of this growth is already factored into the current share price.

According to this DCF analysis, the intrinsic value per share is estimated at $405.73. However, when this figure is compared to Axon’s recent share price, the calculation indicates the stock is trading at a 91.7% premium over its DCF-derived fair value. This suggests Axon is significantly overvalued at current levels, based strictly on projected cash flows.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Axon Enterprise.

Our Discounted Cash Flow (DCF) analysis suggests Axon Enterprise may be overvalued by 91.7%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Axon Enterprise Price vs Sales

The Price-to-Sales (P/S) ratio is often the preferred multiple when assessing high-growth companies like Axon Enterprise, particularly in the technology sector where profits may be reinvested for expansion and earnings may not fully capture potential. The P/S ratio helps investors determine how much they are paying for each dollar of sales, making it especially useful for profitable firms that are reinvesting for future gains.

Growth and risk are key drivers in shaping what is considered a “normal” P/S ratio. High growth typically justifies a higher multiple, as investors expect greater future sales and earnings. Conversely, higher risk or lower growth means investors are less willing to pay a premium for those sales.

Currently, Axon Enterprise trades at a P/S ratio of 25.5x. This stands well above both the Aerospace & Defense industry average of 3.0x and the peer group average of 7.9x. To provide a more nuanced benchmark, Simply Wall St’s proprietary “Fair Ratio” for Axon is 15.3x. This Fair Ratio reflects a combination of factors specific to Axon, including its elevated sales growth, strong margins, industry positioning, company size, and business risks. As a result, it offers a more comprehensive assessment than using broad industry or peer averages alone.

Comparing Axon's actual P/S of 25.5x to its Fair Ratio of 15.3x, the stock appears to be trading at a substantial premium, suggesting the market is pricing in a lot of optimism.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Axon Enterprise Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply the story behind your investment perspective: your view of Axon Enterprise’s future, based on what you believe about its growth, risks, and opportunities. Narratives connect your unique outlook to tangible financial forecasts, like projected revenue, earnings, or profit margins, and then to a fair value for the company. This approach allows you to see exactly how your assumptions play out in dollar terms, rather than just holding general opinions.

On Simply Wall St’s Community page, Narratives are an easy, accessible tool used by millions of investors to clarify and organize their investment thinking. Narratives help you decide whether to buy or sell by comparing your calculated Fair Value to the current market Price, and they automatically update when new company news or earnings are released, keeping your insights current without extra effort.

For example, with Axon Enterprise, some investors might see soaring demand for AI, drones, and global public safety solutions and assign a high fair value near $1,000. Others may focus on margin pressure and regulatory risks, resulting in a far more cautious outlook below $800. Narratives put the “why” behind each number, allowing you to quickly understand contrasting opinions and make a smarter, story-driven decision for yourself.

Do you think there's more to the story for Axon Enterprise? Create your own Narrative to let the Community know!

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.

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