Axon Enterprise, Inc. (AXON): what the price requires

At today's price, Axon Enterprise, Inc. (AXON) is priced for today's economics sustained for ~28.0 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Source: https://boothcheck.com/report/AXON

Headline

FieldValue
TickerAXON
CompanyAxon Enterprise, Inc.
Current price$544.77/sh
CompositionTASER 33% / Personal Sensors 14% / Platform Solutions 10% / Software and Services 43%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (mid-cycle)3.3%
Trailing margin (depressed year)0.6%
Must persist for28.0y
Multiple paid483x mid-cycle operating income

Solve inputs: computed at a 9.7% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~3.3 years.

How unusual the bet is: elevated

ReferenceValue
vs own history+0.65σ
sustained it ~10 years at this level14%
implied end-window share1%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset11.14x1expensive
Earnings—0—
Relative5.30x2expensive
Growth1.57x3expensive

Families that call it expensive: Asset, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.

Per-Model Detail (n=6)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$33.0616.48xyesFCF base $0.1B, growth 25% (input: historical growth), terminal g 4.0%, WACC 8.9%, 7yr projection
DCF Exit MultipleGrowth$347.581.57xyesExit EV/EBITDA: 7278.9x / 7280.9x / 7282.9x (bear / base = today's held flat / bull), 7yr
Relative ValuationRelative$118.804.59xyesP/E 39.6x (blended: static sector reference 18x + trailing (TTM) 218x), scenarios: 31.7x / 39.6x / 47.5x (bear / base = reference held flat / bull), EV/EBITDA 26.4x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$27.0020.18xyesBV/sh $42.85, ROE (TTM) 5.8%, ke 9.3% (excluded from median)
Two-Stage Excess ReturnAsset$20.7626.24xyes5yr excess ROE then converge to ke=9.3% (excluded from median)
Discounted Future Market CapGrowth$393.201.39xyesRev $3.0B, growth 30% (input: historical growth; tapered), Terminal P/S: 9.6x / 12.0x / 14.4x (bear / base = today's held flat / bull, cap 12x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.0154477.00xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.03B × (1−15%) / WACC 8.9% → EPV (no growth) (excluded from median)
Residual IncomeAsset$19.9727.28xyesBV $42.85 + 5yr PV of (ROE (TTM) 5.8% − Kₑ 9.3%) × BV; BV grows 3.8%/yr (excluded from median)
Graham NumberAsset$48.9011.14xyes√(22.5 × EPS $2.48 × BVPS $42.85) — Graham's conservative floor
EV/EBITDA RelativeRelative$0.0154477.00xyesEBITDA $0.01B × sector EV/EBITDA 12.0x (excluded from median)
FCF YieldEarnings$0.0154477.00xyesFCF $19.5M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$2.08261.91xyesEPS $2.48 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$2.56212.80xyesBV $42.85 × (ROIC 0.5% / WACC 8.9%) (excluded from median)
P/Sales SectorRelative$90.436.02xyesRevenue $2.98B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$26.8120.32xyesEPS $2.48 / required return 9.3% (Rf 4.3% + ERP 5.0%) (excluded from median)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$994.0m
Net debt / NOPAT (after-tax)12.77x
Net debt / operating income (pre-tax)10.80x
Interest coverage1.0x
Share count CAGR (dilution)3.3%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 3.3%); the trailing year was depressed.

Bullet Takeaways

At $423.06 (as of June 27, 2026) Axon is a growth-stage business priced as if the growth never slows: the price implies operating profit compounding at its self-funding ceiling for about 26 years, and no valuation family reaches the quote. It is rich on assets, earnings power, peers, and even forward growth.

Read at the right stage, the numbers explain the premium. Q1 2026 revenue grew 34% to $807 million, the ninth straight quarter above 30%, with annual recurring revenue up 35% to $1.5 billion, net revenue retention of 125%, and future contracted bookings up 44% to $14.3 billion. The software and recurring base is real.

The gap between price and the standard frames is the widest in this batch. Even the most generous forward-growth method lands near $383, below the quote; no method family reaches the price. The price is a bet on a multi-decade compounding runway, not on current earnings.

Bull Case

Axon is a growth-stage company, and the only honest way to read its numbers is through that lens: trailing earnings are deliberately suppressed by reinvestment, so book value and current operating income understate the franchise by design. The right metrics are recurring revenue, retention, and contracted backlog, and on those the business is exceptional. Q1 2026 revenue grew 34% year over year to $807 million, the ninth consecutive quarter above 30% growth, with net income of $169 million.

The recurring engine is what gives the premium its foundation. Annual recurring revenue rose 35% to $1.5 billion, net revenue retention ran 125%, meaning existing customers spend a quarter more each year, and future contracted bookings grew 44% to $14.3 billion, a backlog more than four times trailing revenue. The composition has shifted decisively toward software: Software and Services is the largest piece of the business at roughly 43% of revenue, ahead of the legacy TASER hardware. The FY2025 10-K recast its segment disclosures around that realignment, formalizing the transition from a weapons maker to a software platform for law enforcement. That mix shift is why AI Product Revenue grew over 700% in the quarter as agencies adopt real-time AI tools and the cloud evidence platform.

The long-term targets frame the runway. Management guides to 2028 of $6 billion in annual revenue, a 28% adjusted EBITDA margin, and 60% free-cash-flow conversion, and raised full-year 2026 revenue-growth guidance to 30% to 32% with a 25.5% adjusted EBITDA margin. Axon sits inside a sticky, mission-critical workflow with multi-year agency contracts and switching costs that compound as more of policing runs through its platform. The price assumes a long compounding runway, and a business growing recurring revenue in the mid-30s with a backlog this large and retention above 120% is the rare profile where that assumption is at least underwritable rather than fanciful.

Bear Case

The external variable with the most leverage on Axon is the one it controls least: government and law-enforcement budgets, set by politics. Its customers are police departments, federal agencies, and corrections facilities, all funded by public money that swings with election cycles, municipal fiscal health, and the politics of policing. A wave of budget pressure, a shift in public sentiment on police technology, or regulatory scrutiny of AI-enabled surveillance and body-camera data could slow the adoption curve the price depends on. The current price requires the growth to persist for an extraordinary span, and that span runs straight through political risk Axon cannot hedge.

The valuation is the starkest in this batch, and it is not close. At $423.06 no valuation family reaches the price: the inversion implies operating profit held at its self-funding ceiling for about 26 years, the longest duration in the set. Earnings power value rounds to near zero because normalized EBIT is minimal, the FCF-yield mark collapses because trailing free cash flow is tiny against the market cap, the simple excess-return mark lands near $27, and ROIC-justified book value near $2.59 on a 0.5% accounting ROIC. Even the most generous forward-growth method, a discounted future market cap on 30% revenue growth, reaches only about $383, still below the quote. No standard lens comes close to the price: the growth family defends the most and even it sits about a third below the quote, while the static lenses value the business at a small fraction of it. When a stock trades at more than ten times even the optimistic frame, the entire thesis is duration of hypergrowth.

Execution and dilution complete the risk. Trailing operating margin is slightly negative, so the profitability targets are guidance, not history, and the path to a 28% EBITDA margin by 2028 assumes reinvestment converts to operating leverage on schedule. Share count is compounding at roughly 7% a year through stock-based compensation, diluting holders even as the business grows. Net debt is about $994 million with interest coverage under 1x on current operating income. The bet is that a politically exposed, currently-unprofitable platform compounds revenue in the 30s for the better part of a decade and then expands margins as promised. Any stumble, a budget cycle, a contract loss, an AI-regulation headwind, or a single missed guidance raise, hits a price with no valuation support beneath it.

Valuation

Inverting the $423.06 price gives a striking number. At that level the implied operating-profit growth must hold near its self-funding ceiling for about 26 years, the longest duration in this batch, and every valuation family still sits below the price. The characterization is unambiguous: rich on assets, earnings power, peers, and even forward growth. Each one-point change in the assumed growth rate moves the implied horizon by roughly three years, so the price is almost entirely a wager on how many years of hypergrowth Axon strings together. The reverse-DCF range, built on normalized rather than current margins, lands far below the price near $17 to $24, with low reliability flagged because the inputs are growth-stage and volatile.

The model X-ray shows the gap concretely. The forward-growth methods are the most generous and still fall short: a discounted future market cap near $383 on 30% revenue growth, a DCF exit-multiple near $273. The relative P/E mark lands near $119 on a blended sector-plus-trailing multiple. The asset and earnings frames are an order of magnitude below: earnings power value near zero, FCF yield near zero, simple excess return near $27, residual income near $20, Graham number near $49. The methods disagree by an order of magnitude and none reaches the price: forward growth defends about a third below the quote, and the earnings and asset lenses sit at ten to sixteen times their standalone values.

The spread is the information, and here it is enormous. This is not a case where the methods cluster and one is too conservative. Every standard frame, including the optimistic forward-growth ones, is below the price, most by a wide margin. The price is not a judgment on whether Axon is an exceptional business, the recurring revenue, retention, and backlog say it is. It is a measure of how much future has been booked: roughly a quarter-century of ceiling-rate compounding, with the margin expansion to 2028 targets assumed rather than demonstrated.

Catalysts

The dominant catalyst is the growth and guidance cadence. Q1 2026 revenue of $807 million grew 34%, the ninth straight quarter above 30%, and Axon raised full-year 2026 revenue-growth guidance to 30% to 32% with a 25.5% adjusted EBITDA margin. Each quarterly print against that steep curve, and any further guidance raise, is the largest mover for a price with no valuation support beneath it.

The software and AI transition is the structural catalyst. AI Product Revenue grew over 700% year over year, annual recurring revenue rose 35% to $1.5 billion, net revenue retention ran 125%, and future contracted bookings grew 44% to $14.3 billion. Adoption of real-time AI tools and the cloud evidence platform, plus progress toward the 2028 targets of $6 billion revenue and 28% EBITDA margin, are the multi-year drivers.

The risks to watch are external and dilutive: law-enforcement and government budget cycles, public and regulatory sentiment on AI-enabled policing technology, large-agency contract wins or losses, and stock-based-compensation dilution running near 7% a year. Watch ARR and bookings growth, margin progression toward guidance, AI adoption metrics, and any budget or regulatory developments affecting public-safety spending.

Sources: PRNewswire and Axon investor relations (AXON Q1 2026 results, $807M revenue up 34%, raised guidance), Investing.com (AI revenue up 700%, ARR $1.5B, NRR 125%, bookings $14.3B), Yahoo Finance and Quartr (nine straight quarters above 30% growth, 2028 targets of $6B revenue, 28% EBITDA margin, 60% FCF conversion).

Peer Cohorts (Per Segment, With Filing Citations)

Connected Devices (reported)

Software and Services (reported)

Article Insight (Recent News Sentiment)

Sentiment score: 75.00 (HIGH confidence) FUD/Hype: HYPE_DETECTED (The articles consistently emphasize bullish analyst ratings and growth potential, bordering on promotional language.) Claim alignment: ALIGNED

These articles collectively signal positive sentiment regarding Axon Enterprise, primarily driven by analyst upgrades and enthusiasm surrounding its AI-powered product suite.

The Globe and Mail

Insider Monkey (AI Co-Pilot)

Insider Monkey (Growth Metrics)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive AXON report on boothcheck