Intrinsic value of Axon Enterprise, Inc. - AAXN

Previous Close

$50.02

  Intrinsic Value

$20.45

stock screener

  Rating & Target

str. sell

-59%

Previous close

$50.02

 
Intrinsic value

$20.45

 
Up/down potential

-59%

 
Rating

str. sell

We calculate the intrinsic value of AAXN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  21.30
  19.67
  18.20
  16.88
  15.69
  14.62
  13.66
  12.80
  12.02
  11.31
  10.68
  10.12
  9.60
  9.14
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.61
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
Revenue, $m
  509
  610
  721
  842
  975
  1,117
  1,270
  1,432
  1,604
  1,786
  1,976
  2,176
  2,385
  2,604
  2,831
  3,067
  3,313
  3,569
  3,835
  4,111
  4,398
  4,696
  5,007
  5,329
  5,665
  6,015
  6,379
  6,758
  7,154
  7,566
Variable operating expenses, $m
  430
  513
  606
  708
  818
  938
  1,065
  1,201
  1,345
  1,497
  1,652
  1,819
  1,994
  2,176
  2,366
  2,564
  2,770
  2,984
  3,206
  3,437
  3,677
  3,926
  4,185
  4,455
  4,736
  5,028
  5,332
  5,649
  5,980
  6,325
Fixed operating expenses, $m
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  54
  56
  57
  58
  59
  61
  62
  63
  65
  66
  68
  69
  71
  72
  74
  75
  77
  79
Total operating expenses, $m
  472
  556
  650
  753
  864
  985
  1,113
  1,250
  1,395
  1,548
  1,704
  1,872
  2,048
  2,232
  2,423
  2,622
  2,829
  3,045
  3,268
  3,500
  3,742
  3,992
  4,253
  4,524
  4,807
  5,100
  5,406
  5,724
  6,057
  6,404
Operating income, $m
  38
  53
  71
  90
  110
  133
  157
  182
  209
  238
  272
  304
  337
  372
  408
  445
  484
  525
  567
  611
  657
  704
  754
  805
  859
  914
  973
  1,033
  1,096
  1,162
EBITDA, $m
  51
  69
  88
  109
  132
  157
  184
  213
  243
  275
  309
  344
  381
  420
  460
  502
  546
  592
  639
  688
  739
  792
  847
  905
  964
  1,027
  1,092
  1,159
  1,230
  1,304
Interest expense (income), $m
  0
  0
  3
  6
  10
  14
  18
  23
  28
  33
  38
  44
  50
  57
  64
  71
  78
  86
  94
  102
  111
  120
  129
  139
  149
  159
  170
  181
  193
  205
  218
Earnings before tax, $m
  38
  50
  65
  80
  97
  115
  134
  155
  177
  200
  228
  253
  280
  308
  337
  367
  398
  431
  465
  500
  537
  575
  615
  656
  700
  744
  791
  840
  891
  944
Tax expense, $m
  10
  14
  17
  22
  26
  31
  36
  42
  48
  54
  62
  68
  76
  83
  91
  99
  108
  116
  126
  135
  145
  155
  166
  177
  189
  201
  214
  227
  241
  255
Net income, $m
  28
  37
  47
  58
  71
  84
  98
  113
  129
  146
  166
  185
  204
  225
  246
  268
  291
  315
  339
  365
  392
  420
  449
  479
  511
  543
  578
  613
  650
  689

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  651
  779
  920
  1,076
  1,245
  1,427
  1,622
  1,829
  2,049
  2,281
  2,524
  2,780
  3,047
  3,325
  3,615
  3,917
  4,232
  4,558
  4,898
  5,250
  5,617
  5,998
  6,394
  6,806
  7,235
  7,681
  8,146
  8,631
  9,136
  9,663
Adjusted assets (=assets-cash), $m
  651
  779
  920
  1,076
  1,245
  1,427
  1,622
  1,829
  2,049
  2,281
  2,524
  2,780
  3,047
  3,325
  3,615
  3,917
  4,232
  4,558
  4,898
  5,250
  5,617
  5,998
  6,394
  6,806
  7,235
  7,681
  8,146
  8,631
  9,136
  9,663
Revenue / Adjusted assets
  0.782
  0.783
  0.784
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
Average production assets, $m
  65
  77
  92
  107
  124
  142
  161
  182
  204
  227
  251
  276
  303
  331
  360
  390
  421
  453
  487
  522
  559
  596
  636
  677
  719
  764
  810
  858
  909
  961
Working capital, $m
  52
  62
  74
  86
  99
  114
  130
  146
  164
  182
  202
  222
  243
  266
  289
  313
  338
  364
  391
  419
  449
  479
  511
  544
  578
  613
  651
  689
  730
  772
Total debt, $m
  54
  114
  180
  253
  333
  418
  510
  607
  711
  820
  934
  1,054
  1,180
  1,311
  1,447
  1,589
  1,737
  1,890
  2,050
  2,215
  2,388
  2,567
  2,753
  2,947
  3,148
  3,358
  3,577
  3,804
  4,042
  4,289
Total liabilities, $m
  306
  366
  433
  506
  585
  671
  762
  860
  963
  1,072
  1,186
  1,306
  1,432
  1,563
  1,699
  1,841
  1,989
  2,142
  2,302
  2,468
  2,640
  2,819
  3,005
  3,199
  3,400
  3,610
  3,829
  4,057
  4,294
  4,542
Total equity, $m
  345
  413
  488
  570
  660
  756
  859
  969
  1,086
  1,209
  1,338
  1,473
  1,615
  1,762
  1,916
  2,076
  2,243
  2,416
  2,596
  2,783
  2,977
  3,179
  3,389
  3,607
  3,835
  4,071
  4,318
  4,574
  4,842
  5,121
Total liabilities and equity, $m
  651
  779
  921
  1,076
  1,245
  1,427
  1,621
  1,829
  2,049
  2,281
  2,524
  2,779
  3,047
  3,325
  3,615
  3,917
  4,232
  4,558
  4,898
  5,251
  5,617
  5,998
  6,394
  6,806
  7,235
  7,681
  8,147
  8,631
  9,136
  9,663
Debt-to-equity ratio
  0.160
  0.280
  0.370
  0.440
  0.500
  0.550
  0.590
  0.630
  0.650
  0.680
  0.700
  0.720
  0.730
  0.740
  0.760
  0.770
  0.770
  0.780
  0.790
  0.800
  0.800
  0.810
  0.810
  0.820
  0.820
  0.820
  0.830
  0.830
  0.830
  0.840
Adjusted equity ratio
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530
  0.530

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  28
  37
  47
  58
  71
  84
  98
  113
  129
  146
  166
  185
  204
  225
  246
  268
  291
  315
  339
  365
  392
  420
  449
  479
  511
  543
  578
  613
  650
  689
Depreciation, amort., depletion, $m
  13
  15
  17
  20
  22
  25
  28
  31
  34
  37
  37
  41
  45
  49
  53
  57
  62
  67
  72
  77
  82
  88
  94
  100
  106
  112
  119
  126
  134
  141
Funds from operations, $m
  41
  52
  64
  78
  93
  108
  125
  144
  163
  183
  203
  226
  249
  273
  299
  325
  353
  381
  411
  442
  474
  508
  543
  579
  616
  656
  697
  739
  784
  831
Change in working capital, $m
  9
  10
  11
  12
  13
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  40
  42
Cash from operations, $m
  32
  42
  53
  65
  79
  94
  110
  127
  145
  164
  184
  205
  228
  251
  276
  301
  328
  355
  384
  414
  445
  477
  511
  546
  582
  620
  660
  701
  744
  788
Maintenance CAPEX, $m
  -8
  -10
  -11
  -13
  -16
  -18
  -21
  -24
  -27
  -30
  -33
  -37
  -41
  -45
  -49
  -53
  -57
  -62
  -67
  -72
  -77
  -82
  -88
  -94
  -100
  -106
  -112
  -119
  -126
  -134
New CAPEX, $m
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -50
  -52
Cash from investing activities, $m
  -20
  -23
  -25
  -28
  -33
  -36
  -40
  -45
  -49
  -53
  -57
  -62
  -68
  -73
  -78
  -83
  -88
  -94
  -101
  -107
  -113
  -120
  -127
  -135
  -143
  -150
  -158
  -167
  -176
  -186
Free cash flow, $m
  13
  20
  28
  37
  47
  58
  70
  83
  97
  111
  126
  143
  160
  179
  198
  218
  239
  261
  284
  307
  332
  357
  384
  411
  440
  470
  501
  533
  567
  602
Issuance/(repayment) of debt, $m
  54
  60
  67
  73
  79
  86
  92
  98
  103
  109
  115
  120
  125
  131
  136
  142
  148
  154
  160
  166
  172
  179
  186
  194
  202
  210
  219
  228
  237
  248
Issuance/(repurchase) of shares, $m
  33
  31
  28
  24
  19
  13
  5
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  87
  91
  95
  97
  98
  99
  97
  98
  103
  109
  115
  120
  125
  131
  136
  142
  148
  154
  160
  166
  172
  179
  186
  194
  202
  210
  219
  228
  237
  248
Total cash flow (excl. dividends), $m
  100
  111
  122
  134
  145
  156
  167
  180
  200
  220
  241
  263
  286
  310
  334
  360
  387
  414
  443
  473
  504
  536
  570
  605
  642
  680
  720
  761
  805
  850
Retained Cash Flow (-), $m
  -61
  -68
  -75
  -82
  -89
  -96
  -103
  -110
  -116
  -123
  -129
  -135
  -141
  -148
  -154
  -160
  -167
  -173
  -180
  -187
  -194
  -202
  -210
  -218
  -227
  -237
  -246
  -257
  -268
  -279
Prev. year cash balance distribution, $m
  183
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  222
  43
  47
  51
  55
  59
  63
  70
  83
  98
  112
  128
  144
  162
  181
  200
  220
  241
  263
  286
  310
  334
  360
  387
  414
  443
  473
  504
  537
  571
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  213
  39
  41
  42
  43
  43
  43
  44
  48
  51
  53
  54
  55
  54
  53
  51
  48
  44
  41
  36
  32
  28
  24
  20
  16
  13
  10
  8
  6
  4
Current shareholders' claim on cash, %
  98.2
  96.8
  95.8
  95.0
  94.5
  94.2
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1

Axon Enterprise, Inc., formerly TASER International, Inc., is engaged in development, manufacture and sale of conducted electrical weapons (CEWs) for use by law enforcement, military, corrections and private security personnel, and by private individuals for personal defense. It is also engaged in development of connected wearable on-officer cameras. It operates through two segments: the sale of CEWs, accessories, and other related products and services (the TASER Weapons segment), and the Axon business, focused on devices, wearables, applications, cloud and mobile products (the Axon segment). Its TASER Weapons product line includes TASER X26P, TASER X2, TASER C2, TASER Pulse and Replacement Cartridges. Its hardware products include Axon Body 2, Axon Flex, Axon Fleet, Axon Interview, Axon Signal and Axon Dock. Its Axon software and mobile technologies include Evidence.com, Evidence.com for Prosecutors, Evidence Sync, Axon Capture, Axon View, Axon Five, Axon Convert and Axon Detect.

FINANCIAL RATIOS  of  Axon Enterprise, Inc. (AAXN)

Valuation Ratios
P/E Ratio 154
Price to Sales 9.8
Price to Book 17.3
Price to Tangible Book
Price to Cash Flow 145.4
Price to Free Cash Flow 261.8
Growth Rates
Sales Growth Rate 35.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.3%
Cap. Spend. - 3 Yr. Gr. Rate 32%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 1.3%
Total Debt to Equity 1.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 6.7%
Ret/ On Assets - 3 Yr. Avg. 9.4%
Return On Total Capital 11%
Ret/ On T. Cap. - 3 Yr. Avg. 13.9%
Return On Equity 11%
Return On Equity - 3 Yr. Avg. 14%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 62.3%
Gross Margin - 3 Yr. Avg. 62.2%
EBITDA Margin 13.4%
EBITDA Margin - 3 Yr. Avg. 18.1%
Operating Margin 11.9%
Oper. Margin - 3 Yr. Avg. 16.5%
Pre-Tax Margin 11.9%
Pre-Tax Margin - 3 Yr. Avg. 16.3%
Net Profit Margin 6.3%
Net Profit Margin - 3 Yr. Avg. 9.5%
Effective Tax Rate 46.9%
Eff/ Tax Rate - 3 Yr. Avg. 42.4%
Payout Ratio 0%

AAXN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AAXN stock intrinsic value calculation we used $420 million for the last fiscal year's total revenue generated by Axon Enterprise, Inc.. The default revenue input number comes from 0001 income statement of Axon Enterprise, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AAXN stock valuation model: a) initial revenue growth rate of 21.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AAXN is calculated based on our internal credit rating of Axon Enterprise, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Axon Enterprise, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AAXN stock the variable cost ratio is equal to 84.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $41 million in the base year in the intrinsic value calculation for AAXN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Axon Enterprise, Inc..

Corporate tax rate of 27% is the nominal tax rate for Axon Enterprise, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AAXN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AAXN are equal to 12.7%.

Life of production assets of 6.8 years is the average useful life of capital assets used in Axon Enterprise, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AAXN is equal to 10.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $467.324 million for Axon Enterprise, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 58.799 million for Axon Enterprise, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Axon Enterprise, Inc. at the current share price and the inputted number of shares is $2.9 billion.

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