Axon Enterprise (AAXN) Q1 Earnings: What's In The Cards?

Axon Enterprise, Inc. (NASDAQ:AAXN) will release first-quarter 2018 results on May 8, after market close.

In the last reported quarter, the company delivered a positive earnings surprise of 700%. In the trailing four quarters, the company pulled off positive surprises twice with an average positive surprise of 188.33%.

Let’s see how things are shaping up for this announcement.

Axon Enterprise, Inc Price and EPS Surprise

Factors to Consider

Axon Enterprise is a renowned supplier of smart weapons and body-worn video cameras in the security and public safety space. Keeping with this trend, the company won a number of orders for its smart weapons from various police departments in the first quarter of 2018. Some of the company’s notable buyers in the quarter include Victoria Police in Australia, Allegheny County Police Department, Dallas-Fort Worth International Airport Police, Virginia Beach Police Department Chicago Police Department and more than a dozen of State Police Departments along with a few Federal agencies. Such a massive rise in orders is expected to boost sales.

In line with this, the Zacks Consensus Estimate for first-quarter revenues is pegged at $92 million, reflecting 15.9% year-over-year improvement.

In the fourth quarter of 2017, the company implemented a robust cost saving initiative. With this initiative expected to continue in 2018 as well, the company expects annual cost savings of $4.5 million, starting this year. Therefore, we expect partial benefits from such cost control measures to influence the company’s upcoming results.

On the flip side, higher operating expenses have been weighing on Axon Enterprise’s bottom line. Notably, during the fourth quarter, the company’s operating expenses surged a solid 37%.

Thus, we expect Axon Enterprise’s first-quarter results to reflect higher operating expenses as well, which in turn is likely to drag down its bottom line. As a result, the Zacks Consensus Estimate for first-quarter earnings stands at 4 cents, representing a 42.9% year-over-year plunge.

Earnings Whispers

Our proven model does not conclusively show that an earnings beat is likely for Axon Enterprise this quarter. Notably, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, Axon Enterprise lacks one of these attributes, as mentioned below:

Zacks ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Axon Enterprise sports a Zacks Rank #1, which increases the power of surprise prediction. However, a 0.00% Earnings ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are a few stocks in the Zacks Industrial Products sector worth considering on the basis of our model, which shows that they have the right combination to pull off a beat.

Sun Hydraulics Corporation (NASDAQ:SNHY) is expected to report first-quarter results on May 7. The company has an Earnings ESP of +0.55% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rexnord Corporation (NYSE:RXN) is expected to report first-quarter 2018 results on May 14. The company has an Earnings ESP of +1.82% and a Zacks Rank #2.

Brady Corporation (NYSE:BRC) is expected to report first-quarter results on May 24. The company has an Earnings ESP of +1.03% and a Zacks Rank #2.

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