Has Axon’s Recent Share Price Slip Opened a Window for Long Term Investors in 2025?
- If you have been wondering whether Axon Enterprise is still worth buying after its massive run over the last few years, this breakdown is for you.
- The stock has slipped recently, with returns of 0.6% over the last week, -6.5% over the last month, and -8.4% year to date, but that comes after a huge 215.0% gain in three years and 355.8% over five years.
- Investors have been reacting to Axon's continued push into cloud based software and connected devices, alongside growing adoption of its Taser and body camera platforms by police departments and government agencies worldwide. These developments have reinforced the long term growth story, even as the share price has cooled off in the short term.
- Right now, Axon scores a 2/6 valuation check rating, which suggests it only screens as undervalued on a couple of our standard metrics. We will dig into what different valuation methods say and finish by exploring a more nuanced way to think about Axon's true worth.
Axon Enterprise scores just 2/6 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 model estimates what a company is worth by projecting its future cash flows and then discounting them back to today, using a required rate of return. For Axon Enterprise, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $.
Axon generated trailing twelve month free cash flow of about $147.7 Million, and analysts expect this to scale rapidly as the company grows its cloud software and devices business. Simply Wall St aggregates analyst estimates for the next few years, and then extrapolates further to arrive at a projected free cash flow of roughly $2.0 Billion by 2035. Those yearly cash flows are discounted back to today to estimate what the entire stream is worth in present value terms.
On this basis, the DCF model suggests an intrinsic value of around $401.63 per share. Compared with the current market price, this implies Axon is about 36.1% overvalued according to this cash flow based view.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Axon Enterprise may be overvalued by 36.1%. Discover 894 undervalued stocks or create your own screener to find better value opportunities.
Approach 2: Axon Enterprise Price vs Sales
For a fast growing, profitable company like Axon that is still reinvesting heavily, the price to sales ratio is a useful way to value the business, because it looks at what investors are willing to pay for each dollar of revenue, regardless of current accounting earnings. In general, higher expected growth and lower perceived risk justify a higher sales multiple, while slower growth or higher uncertainty usually call for a more modest ratio.
Axon currently trades at about 16.9x sales, well above the broader Aerospace and Defense industry average of roughly 2.9x, but slightly below the peer average of 18.0x. Simply Wall St also calculates a proprietary Fair Ratio of 14.3x, which estimates what Axon’s sales multiple should be after factoring in its growth outlook, profitability, industry dynamics, size, and risk profile.
This Fair Ratio is more informative than a simple comparison with peers or the sector, because it adjusts for Axon’s specific fundamentals instead of assuming that all companies in the group deserve the same multiple. With the market paying 16.9x against a Fair Ratio of 14.3x, Axon screens as somewhat expensive on a sales basis.
Result: OVERVALUED
PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1450 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 us introduce you to Narratives, an easy tool on Simply Wall St’s Community page that lets you connect your story about Axon Enterprise, including your assumptions for future revenue growth, margins, earnings and fair value, to a concrete forecast and a Fair Value you can compare against today’s share price to help inform whether you think it is a buy, hold or sell. The platform keeps your view up to date as new news or earnings arrive. For example, one investor might build a bullish Axon Narrative around roughly 25% annual revenue growth, expanding AI and drone adoption, a long runway in global public safety and a Fair Value near the upper end of analyst targets around $1,000 per share. A more cautious investor might focus on government budget risk, regulatory scrutiny, competition and execution uncertainty and land on a Narrative Fair Value closer to the lower end of targets near $800. This shows how the same company can support very different but clearly framed, numbers backed perspectives.
Do you think there's more to the story for Axon Enterprise? Head over to our Community to see what others are saying!
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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