Will Axon Enterprise (AAXN) Disappoint In Q2 Earnings?

Axon Enterprise, Inc. (NASDAQ:AAXN) will release second-quarter 2017 financial results on Aug 8, after the market closes.

Last quarter, the company delivered a positive earnings surprise of 133.33%. In the trailing four quarters, the company has recorded an average positive surprise of 78.94%. Let’s see how things are shaping up for this announcement.

Factors to Consider

Axon Enterprise’s body-worn video cameras are in strong demand with the company winning orders from domestic and international police departments during the second quarter. This quarter, the company also bagged a number of orders for its smart weapons from various police departments. Some of its notable buyers include California Highway Patrol and Alameda County Sheriff’s Office.

During the first-quarter earnings call, the company said that it expects to record 25% higher revenues year over year in the second quarter. Operating expenses are projected to grow 4-6% sequentially, as the company continues to add customer facing roles, invest in R&D initiatives as well as expand into new international markets.

Per the FBI’s National Instant Criminal Background Check System (NICS), second-quarter 2017’s firearm background checks dropped 4.2 % from the year-ago quarter’s figure, thus indicating a decline in demand for firearms in the soon-to-be reported quarter. This could in turn hurt sales growth for publicly traded gun manufacturers like Axon Enterprise.

In the second quarter, the Zacks Consensus Estimate for earnings is expected to reflect a 42.9% year-over-year plunge, while sales are anticipated to surge 26.9% to $74.57 million.

Earnings Whispers

Our proven model does not show that Axon Enterprise is likely to beat estimates this quarter. This is because 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, that is not the case here as you will see below.

Zacks ESP: Axon Enterprise has an Earnings ESP of 0.00%. This is because the Most Accurate estimate of 4 cents is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Axon Enterprise carries a Zacks Rank #4 (Sell). Please note that we caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Peer Releases

Allegion plc’s (NYSE:ALLE) second-quarter 2017 adjusted earnings came in at $1.11 per share, surpassing the Zacks Consensus Estimate of $1.00 by 11%. Adjusted earnings were up 12.1% from the prior-year quarter. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Assa Abloy AB (OTC:ASAZY) , another Zacks Rank #2, reported second-quarter 2017 adjusted earnings of 11 cents, missing the Zacks Consensus Estimate of 12 cents by 8.3%.

Fortune Brands Home & Security, Inc. (NYSE:FBHS) kept its earnings streak alive in second-quarter 2017. Earnings before charges/gains came in at 92 cents per share, surpassing the Zacks Consensus Estimate of 87 cents by 5.7%. Also, the bottom line grew 12.2% from the year-ago quarter’s tally of 82 cents. It currently carries a Zacks Rank #3.

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