Axon Enterprise (NASDAQ:AXON), best known for its taser and body cams for law enforcement agencies, has had a volatile ride, with its stock falling over 15% in a month, followed by a weakness in broader markets. The S&P500 index is down 8% in a month after the Trump administration’s tariff confirmation on its trade partners including Mexico, Canada, and China.
After its recent fall, AXON stock looks attractive but volatile – making it a tricky pick to buy at its current price of around $560. We believe there is minimal cause for concern with AXON stock, which makes it attractive but highly sensitive to adverse events as its current valuation is extremely high.
We arrive at our conclusion by comparing the current valuation of AXON stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of Axon Enterprise along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a very strong operating performance and financial condition, as detailed below. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
How does Axon Enterprise’s valuation look vs. the S&P 500?
Going by what you pay per dollar of sales or profit, AXON stock looks very expensive compared to the broader market.
• Axon Enterprise has a price-to-sales (P/S) ratio of 20.6 vs. a figure of 3.2 for the S&P 500
• Additionally, the company’s price-to-operating income (P/EBIT) ratio is 351.1 compared to 24.3 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 134.2 vs. the benchmark’s 24.3
How have Axon Enterprise’s revenues grown over recent years?
Axon Enterprise’s Revenues have grown considerably over recent years.
• Axon Enterprise has seen its top line grow at an average rate of 30.7% over the last 3 years (vs. increase of 6.3% for S&P 500)
• Its revenues have grown 32.4% from $1.5 Bil to $1.9 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
• Also, its quarterly revenues grew 31.7% to $544 Mil in the most recent quarter from $413 Mil a year ago (vs. 5.0% improvement for S&P 500)
How profitable is Axon Enterprise?
Axon Enterprise’s profit margins are worse than most companies in the Trefis coverage universe.
• Axon Enterprise’s Operating Income over the last four quarters was $114 Mil, which represents a poor Operating Margin of 5.9% (vs. 13.0% for S&P 500)
• Axon Enterprise’s Operating Cash Flow (OCF) over this period was $298 Mil, pointing to a moderate OCF-to-Sales Ratio of 15.4% (vs. 15.7% for S&P 500)
Does Axon Enterprise look financially stable?
Axon Enterprise’s balance sheet looks very strong.
• Axon Enterprise’s Debt figure was $721 Mil at the end of the most recent quarter, while its market capitalization is $42 Bil (as of 3/12/2025). This implies a very strong Debt-to-Equity Ratio of 1.8% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $1.2 Bil of the $4.0 Bil in Total Assets for Axon Enterprise. This yields a strong Cash-to-Assets Ratio of 28.9% (vs. 14.8% for S&P 500)
How resilient is AXON stock during a downturn?
AXON stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• AXON stock fell 44.8% from a high of $152.87 on 3 January 2022 to $84.37 on 11 May 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 9 November 2022
• Since then, the stock has increased to a high of $710.01 on 18 February 2025 and currently trades at around $560
Covid Pandemic (2020)
• AXON stock fell 40.8% from a high of $88.90 on 19 February 2020 to $52.61 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 1 June 2020
Global Financial Crisis (2008)
• AXON stock fell 85.8% from a high of $18.81 on 9 October 2007 to $2.68 on 20 November 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 20 February 2014
Putting all the pieces together: What it means for AXON stock
In summary, Axon Enterprise’s performance across the parameters detailed above are as follows:
• Growth: Extremely Strong
• Profitability: Weak
• Financial Stability: Extremely Strong
• Downturn Resilience: Weak
• Overall: Strong
Hence, despite its extremely high valuation, the stock appears attractive but volatile, which supports our conclusion that AXON is a tricky stock to buy.
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