DCF Studio

    AXON · NMS · Industrials

    Axon Enterprise, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 7.85

    Market price

    USD 447.76

    Implied upside

    -98.2%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis model values the shares at 1.8% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 4.3% of revenue against depreciation of 2.1%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Current EV/EBITDA of 1733.5x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 7.85-98.2%
    Exit multiple
    USD 92.28-79.4%
    Market price
    USD 447.76

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -736527896-3682639480FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 3.7bnUSD 4.9bnUSD 6.5bnUSD 8.6bnUSD 11.5bn+32.8%
    EBITUSD 170.3mUSD 226.2mUSD 300.3mUSD 398.8mUSD 529.6m+32.8%
    NOPATUSD 147.9mUSD 196.4mUSD 260.8mUSD 346.4mUSD 459.9m+32.8%
    Add depreciation & amortisationUSD 78.4mUSD 104.2mUSD 138.3mUSD 183.7mUSD 243.9m+32.8%
    Less capital expenditureUSD -158.8mUSD -210.8mUSD -280.0mUSD -371.7mUSD -493.6m+32.8%
    Less increase in working capitalUSD -304.5mUSD -404.3mUSD -536.9mUSD -713.0mUSD -946.7m+32.8%
    Free cashflow to firmUSD -236.9mUSD -314.6mUSD -417.7mUSD -554.7mUSD -736.5m-32.8%
    Discount factor0.94630.84730.75870.67930.6083-
    Present valueUSD -224.2mUSD -266.5mUSD -316.9mUSD -376.8mUSD -448.0m-18.9%
    Present Value Of The ForecastUSD -1.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.267Reported 1.399, pulled toward 1.0 (Blume)
    Cost of equity11.97%Risk-free + beta x equity risk premium
    Cost of debt7.16%Interest expense / average total debt
    Market capitalisationUSD 36.4bn95.0% of capital
    Total debtUSD 1.9bn5.0% of capital, book value as a proxy
    Tax rate13.1%Effective, capped at statutory
    WACC11.68%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 7.85

    299% of EV

    Forecast FCFF, final year
    USD -736.5m
    Capex at depreciation, working capital in reinvestment
    USD 459.9m
    Less reinvestment at g/ROIC (21.4% of NOPAT)
    USD -98.4m
    Capitalised
    USD 361.5m
    ROIC (WACC floor)
    11.7%
    Terminal value, undiscounted
    USD 4.0bn
    Terminal value, discounted
    USD 2.5bn
    Enterprise value
    USD 822.3m
    Less net debt
    USD 175.9m
    Equity value
    USD 646.4m

    Exit at 20.0x EBITDA

    Value per shareUSD 92.28

    121% of EV

    Terminal value, undiscounted
    USD 15.5bn
    Terminal value, discounted
    USD 9.4bn
    Enterprise value
    USD 7.8bn
    Less net debt
    USD 175.9m
    Equity value
    USD 7.6bn

    Spread between methods: 169%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.68%15.6215.8116.0016.1916.38
    10.68%11.1411.3011.4711.6311.80
    11.68%7.567.707.857.998.14
    12.68%4.654.784.915.045.17
    13.68%2.282.392.512.622.74

    Outlined: this model. Green text: above today's price of 447.76. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    EBIT margin4.6%52.8%+48.1pp
    Discount rate11.7%3.1%-8.6pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.