Why Buying the AXON Pre-Earnings Stock Dip Might be a Good Idea

Axon Enterprise, Inc. (AXON) has been on a rollercoaster ride recently, with its stock price experiencing a significant dip following an analyst downgrade and partnership issues. However, the company's strong earnings growth and strategic initiatives may make it an attractive investment opportunity, especially ahead of its fourth-quarter 2024 earnings release. Let's explore why buying the AXON pre-earnings stock dip might be a good idea.

Strong Earnings Growth and Strategic Initiatives

Axon has demonstrated impressive earnings growth, with a projected earnings per share (EPS) increase of 27.8% year-over-year for 2024. The company's strategic initiatives, such as expanding its AI offerings and investing in new areas like drones and robotics, have contributed to this growth. These initiatives position Axon at the forefront of technological advancements in the public safety sector, driving demand for its products and services.



Undervalued Compared to Industry Peers

Despite its strong earnings growth, Axon's current valuation is relatively low compared to its industry peers. The company's price-to-earnings (P/E) ratio is 36.1, which is higher than its historical average of 35.5 but still lower than the average P/E ratio for the Aerospace & Defense industry (20.5). This undervaluation may present an opportunity for investors to buy the stock at a discount, given its strong fundamentals and growth prospects.



Earnings Surprises and Stock Price Performance

Axon has a history of positive earnings surprises, with an average surprise of 20.2% in the past four quarters. In the last reported quarter, Axon delivered an earnings surprise of 18.9%, which led to a 9.2% increase in the stock price the following day. While the current Earnings ESP (Expected Surprise Prediction) is 0.00%, and the Zacks Rank is 3 (Hold), the company's track record of earnings surprises suggests that it may still have the potential to beat expectations.



Conclusion

Axon Enterprise, Inc. (AXON) has experienced a pre-earnings stock dip due to analyst downgrades and partnership issues. However, the company's strong earnings growth, strategic initiatives, and undervalued valuation compared to industry peers make it an attractive investment opportunity. While the current Earnings ESP and Zacks Rank suggest a potential earnings miss, Axon's history of positive earnings surprises and strong fundamentals may still lead to a positive earnings beat. Investors should consider buying the AXON pre-earnings stock dip, as the risk-reward profile tilts in their favor.