Yahoo Finance Axon Enterprise (NASDAQ:AXON) pulls back 8.0% this week, but still delivers shareholders incredible 49% CAGR over 5 years
For many, the main point of investing in the stock market is to achieve spectacular returns. While the best companies are hard to find, but they can generate massive returns over long periods. Just think about the savvy investors who held Axon Enterprise, Inc. (NASDAQ:AXON) shares for the last five years, while they gained 623%. And this is just one example of the epic gains achieved by some long term investors. Then again, the 9.9% share price decline hasn't been so fun for shareholders. We note that the broader market is down 2.9% in the last month, and this may have impacted Axon Enterprise's share price. It really delights us to see such great share price performance for investors.
In light of the stock dropping 8.0% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.
View our latest analysis for Axon Enterprise
Axon Enterprise isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
For the last half decade, Axon Enterprise can boast revenue growth at a rate of 23% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 49% per year in that time. It's never too late to start following a top notch stock like Axon Enterprise, since some long term winners go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. If you are thinking of buying or selling Axon Enterprise stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
We're pleased to report that Axon Enterprise shareholders have received a total shareholder return of 66% over one year. That gain is better than the annual TSR over five years, which is 49%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Axon Enterprise , and understanding them should be part of your investment process.
But note: Axon Enterprise may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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