When Should You Buy Axon Enterprise, Inc. (NASDAQ:AXON)?

Today we're going to take a look at the well-established Axon Enterprise, Inc. (NASDAQ:AXON). The company's stock saw a significant share price rise of 35% in the past couple of months on the NASDAQGS. The recent jump in the share price has meant that the company is trading at close to its 52-week high. 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, what if the stock is still a bargain? 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?

According to our valuation model, Axon Enterprise seems to be fairly priced at around 6.89% above our intrinsic value, which means if you buy Axon Enterprise today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $349.00, there’s only an insignificant downside when the price falls to its real value. Furthermore, Axon Enterprise’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Axon Enterprise generate?

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. However, with a negative profit growth of -2.9% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Axon Enterprise. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, AXON appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on AXON for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on AXON should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Axon Enterprise at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Axon Enterprise.

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.

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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.