AXON ENTERPRISE INC (NASDAQ:AXON) Passes the CAN SLIM Investment Test

The CAN SLIM investment methodology, created by William O'Neil, uses fundamental and technical analysis to find high-growth companies with solid market momentum. This methodical process assesses stocks using seven main factors represented by the letters CAN SLIM, looking at earnings speed, yearly growth patterns, new products or services, supply and demand forces, industry leadership, institutional investment, and the general market trend. Stocks that pass these strict tests usually show both good business foundations and strong price action.

Current Quarterly Performance

AXON ENTERPRISE INC (NASDAQ:AXON) shows very good recent quarterly performance that fits well with the "C" part of CAN SLIM, which stresses current quarterly earnings and sales speed. The company's latest financial numbers display notable growth measures that go beyond the system's basic levels:

• Quarterly EPS growth of 76.7% year-over-year
• Quarterly revenue growth of 32.6% year-over-year
• Both numbers are well above the CAN SLIM basic needs of 20% for EPS and 25% for sales growth

This good quarterly performance shows the company is having significant business momentum, an important element for CAN SLIM investors looking for companies with speeding up operational outcomes.

Annual Earnings Growth

The "A" part of CAN SLIM looks at yearly earnings gains, needing steady and sizable growth across several years. AXON displays solid long-term growth trends that meet this requirement:

• Three-year EPS compound annual growth rate of 36.3%
• This is well over the CAN SLIM basic need of 25% yearly growth
• Return on Equity of 11.9%, meeting the system's level of at least 10%

These measures show AXON's capacity to maintain growth over many years instead of depending on short-term quarterly jumps, indicating a lasting business model with repeatable profitability.

Market Leadership and Relative Strength

CAN SLIM stresses investing in industry leaders instead of weaker performers, with the "L" part specifically judging a stock's relative strength against the wider market. AXON shows good market leadership traits:

• Relative strength rating of 83.2, meaning it does better than 83% of all stocks
• This is notably higher than the CAN SLIM basic need of 75 relative strength
• Good yearly performance with 53% price increase over the last year

The high relative strength confirms institutional acknowledgment of AXON's growth narrative, a main psychological part of the CAN SLIM method that implies the stock is being bought by knowledgeable investors.

Institutional Sponsorship and Financial Health

The "I" part reviews institutional investment levels, searching for stocks with increasing but not too high institutional ownership. AXON has a reasonable institutional picture:

• Institutional ownership of 83.1%, under the 85% level that could suggest too much interest
• Debt-to-equity ratio of 0.63, well under the CAN SLIM highest allowed of 2.0
• Good liquidity position with current ratio of 2.95 and quick ratio of 2.71

These measures imply AXON keeps sufficient institutional attention without becoming too popular, while the low debt amounts give financial room for continued growth plans.

Technical and Fundamental Assessment

AXON's combined technical and fundamental picture shows a varied but mostly positive view for growth investors. The company's fundamental analysis shows a business with notable growth measures but high valuation, getting a 5 out of 10 total. The growth part is notable with a score of 8, pushed by impressive historical EPS growth of 57% over the past year and revenue growth over 30%. Profitability measures show good margins, with gross margin at 60.5% doing better than 91% of industry competitors.

The technical analysis presents a more careful short-term view, scoring 4 out of 10 with a negative short-term direction. However, the long-term direction stays neutral, and the stock continues to display good relative strength compared to the wider market. Current price action finds a floor near the $665 point, with a ceiling around $735, showing possible buying chances for waiting investors during market dips.

Industry Position and Innovation

AXON's business model fits well with the "N" part of CAN SLIM, which looks for companies with new products, services, or industry standing. As a maker of conducted electrical weapons and public safety technology answers, AXON works in the changing law enforcement technology field. The company's combined hardware and software system represents new methods for public safety, joining body cameras, evidence management systems, and connected devices into a full ecosystem serving law enforcement groups globally.

For investors looking for more CAN SLIM options, our pre-configured screener gives continuous finding of companies meeting these strict growth and momentum requirements.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions. Past performance is not indicative of future results.