Axon Enterprise, Inc. (NASDAQ: AXON)

Sector: Industrials Industry: Aerospace & Defense CIK: 0001069183
Market Cap 33.15 Bn
P/B 10.95
P/E 128.94
P/S 12.96
ROIC (Qtr) 0.08
Div Yield % 0.00
Rev 1y % (Qtr) 30.57
Total Debt (Qtr) 2.10 Bn
Debt/Equity (Qtr) 0.69
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About

Investment thesis

Bull case

  • Healthy cash reserves of 1.42B provide 5.09x coverage of short-term debt 279.56M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 5.72B provides 2.73x coverage of total debt 2.10B, indicating robust asset backing and low credit risk.
  • Tangible assets of 5.72B provide exceptional 5.70x coverage of deferred revenue 1B, showing strong service capability backing.
  • Tangible assets of 5.72B provide robust 5.99x coverage of other current liabilities 955.17M, indicating strong asset backing.
  • Cash reserves of 1.42B provide robust 1.05x coverage of current liabilities 1.35B, indicating strong short-term solvency.

Bear case

  • Operating cash flow of 244.27M barely covers its investment activities of (940.23M), with a coverage ratio of -0.26, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (940.23M) provide weak support for R&D spending of 624.85M, which is -1.50x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 1.42B provide limited coverage of acquisition spending of (406.83M), which is -3.50x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 700.74M relative to inventory of 317.51M (2.21 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating cash flow of 244.27M provides insufficient coverage of deferred revenue obligations of 1B, which is 0.24x, raising concerns about future service delivery capabilities.

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Aerospace & Defense
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GE General Electric Co 347.18 Bn 39.89 7.57 20.49 Bn
2 RTX RTX Corp 272.90 Bn 40.54 3.08 39.51 Bn
3 BA Boeing Co 185.24 Bn 98.01 2.07 54.10 Bn
4 LMT Lockheed Martin Corp 151.16 Bn 30.13 2.01 21.70 Bn
5 NOC Northrop Grumman Corp /De/ 100.62 Bn 24.06 2.40 17.02 Bn
6 HWM Howmet Aerospace Inc. 99.61 Bn -156.86 7.95 3.05 Bn
7 GD General Dynamics Corp 94.33 Bn 27.82 2.39 8.01 Bn
8 TDG TransDigm Group INC 75.70 Bn 41.87 8.31 30.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 5.20 2.53
EV to Cash from Ops. EV/CFO 141.59 74.76
EV to Debt EV to Debt 16.48 70.01
EV to EBIT EV/EBIT 147.05 8.56
EV to EBITDA EV/EBITDA 748.87 28.68
EV to Free Cash Flow [EV/FCF] EV/FCF 238.49 73.68
EV to Market Cap EV to Market Cap 1.04 1.05
EV to Revenue EV/Rev 13.52 9.46
Price to Book Value [P/B] P/B 10.95 7.10
Price to Earnings [P/E] P/E 128.94 21.32
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -3.71
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 18.88
Dividend per Basic Share Div per Share (Qtr) 0.00 0.72
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 11.28
Interest Coverage Int. cover (Qtr) 3.60 -10.55
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -27.25 -77.00
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 104.83 27,757.82
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.15
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 17.40 -9.06
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -70.06 11.61
EBIT Growth (1y) % EBIT 1y % (Qtr) -34.29 -0.09
EBT Growth (1y) % EBT 1y % (Qtr) -51.86 -31.50
EPS Growth (1y) % EPS 1y % (Qtr) -15.62 -100.94
FCF Growth (1y) % FCF 1y % (Qtr) -34.14 26.50
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 33.04 -1.44
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.38 0.51
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 1.05 1.78
Current Ratio Curr Ratio (Qtr) 3.12 3.60
Debt to Equity Ratio Debt/Equity (Qtr) 0.69 0.32
Interest Cover Ratio Int Coverage (Qtr) 3.60 -10.55
Times Interest Earned Times Interest Earned (Qtr) 3.60 -10.55
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 12.10 -309.23
EBIT Margin % EBIT Margin % (Qtr) 9.19 -340.98
EBT Margin % EBT Margin % (Qtr) 6.64 -345.99
Gross Margin % Gross Margin % (Qtr) 60.30 -51.92
Net Profit Margin % Net Margin % (Qtr) 10.10 -347.41