Axon Enterprise, Inc. AXON is poised to gain from solid momentum in the TASER segment, driven by strong demand for TASER devices. Stable demand for virtual reality training services also supports the segment’s growth. The company continues to witness growing popularity for its next-generation TASER 10 products. Also, growth in cartridge revenues, driven by higher adoption of the TASER products, has been driving the segment’s performance. Growing instances of terrorism and criminal activities with concerns related to the ever-increasing fraudulent activities will augur well for Axon’s products in the quarters ahead.

The addition of new users and associated devices to the Axon network is aiding the Software & Sensors segment. Increased demand for cloud-connected TASER devices in the field in the aggregate number of users and average revenue per user, driven by increased adoption of software applications, is also driving Axon Evidence and cloud services’ growth within the segment. Solid professional services revenues associated with new product installations, including Axon Fleet cameras, are also proving beneficial for the segment.

AXON has been strengthening its business through acquisitions. In October 2024, the company acquired Dedrone, a global leader in airspace security. The inclusion of Dedrone’s advanced airspace technology will boost Axon's capability to enable customers to protect their communities against drone threats and improve response to critical incidents.  In January 2024, the company acquired Fusus, a leader in real-time crime center technology. The buyout will combine Fusus’ real-time situational awareness expertise with Axon's innovative public safety technology, thereby enhancing safety and security for its customers in public places. Also, the company’s acquisition of Sky-Hero (July 2023), an innovator in drones and ground-based vehicles, expanded its Axon Air portfolio, which consists of its drone software and hardware portfolio.

In the past year, this Zacks Rank #3 (Hold) company’s shares have gained 136.5% compared with the industry’s 34.8% growth.

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Headwinds Plaguing AXON

The escalating costs and expenses are a concern for Axon’s bottom line. In 2023, the company’s cost of sales soared 31.8% year over year. Also, in the first nine months of 2024, the metric climbed 39.5%. The metric, as a percentage of sales, was 68.7%, up 670 basis points year over year. The company incurred high costs and expenses related to business integration activities, an increase in headcount and higher wages and stock-based compensation expenses.

Axon’s international presence keeps it exposed to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar may require the company to either raise prices or accept margin contraction in locations outside the United States. Thus, adverse currency movements are a risk.

Stocks to Consider

Some better-ranked companies from the same space are discussed below.

Leonardo DRS, Inc. DRS currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DRS delivered a trailing four-quarter average earnings surprise of 22.3%. In the past 60 days, the Zacks Consensus Estimate for Leonardo’s 2024 earnings increased 7%.

Triumph Group, Inc. TGI presently sports a Zacks Rank of 1. TGI delivered a trailing four-quarter average earnings surprise of 100.5%.

In the past 60 days, the consensus estimate for TGI’s fiscal 2025 earnings has inched up 87.5%.

Curtiss-Wright Corporation CW presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 12.8%.

In the past 60 days, the consensus estimate for Curtiss-Wright’s 2024 earnings has increased 1.3%.

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Triumph Group, Inc. (TGI) : Free Stock Analysis Report

Curtiss-Wright Corporation (CW) : Free Stock Analysis Report

Axon Enterprise, Inc (AXON) : Free Stock Analysis Report

Leonardo DRS, Inc. (DRS) : Free Stock Analysis Report

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