Stock Analysis on Net
Stock Analysis on Net

Axon Enterprise Inc. (NASDAQ:AXON)

This company has been moved to the archive! The financial data has not been updated since May 9, 2023.

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin 

Microsoft Excel

Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.

Two-Component Disaggregation of ROE

Axon Enterprise Inc., decomposition of ROE

Microsoft Excel
ROE = ROA × Financial Leverage
Dec 31, 2022 11.60% = 5.16% × 2.25
Dec 31, 2021 -5.73% = -3.56% × 1.61
Dec 31, 2020 -0.18% = -0.12% × 1.41
Dec 31, 2019 0.16% = 0.10% × 1.56
Dec 31, 2018 6.25% = 4.06% × 1.54

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Return on Assets (ROA)
The ROA exhibited considerable volatility throughout the analyzed period. It began at 4.06% in 2018, sharply declined to near zero in 2019, and dipped into negative territory in 2020 and 2021, reaching a low of -3.56%. This downward trend reversed dramatically in 2022, with ROA jumping to 5.16%, the highest point over the five years. The fluctuations indicate variable efficiency in asset utilization, with a notable recovery in the most recent year.
Financial Leverage
Financial leverage ratios showed an overall increasing trend. Starting from 1.54 in 2018, the ratio remained relatively stable in 2019, decreased slightly in 2020, then increased again in 2021, and rose substantially to 2.25 in 2022. This suggests a growing reliance on debt or borrowed capital relative to equity, peaking in 2022, which may have implications for the company’s risk profile.
Return on Equity (ROE)
ROE mirrored the volatility seen in ROA. It was positive at 6.25% in 2018, fell to nearly zero in 2019, and turned negative in 2020 and 2021, declining to -5.73%. However, in 2022, ROE surged significantly to 11.6%, the highest in the period. The marked improvement in ROE in 2022 indicates a stronger ability to generate profit from shareholders’ equity after two years of losses.

Three-Component Disaggregation of ROE

Axon Enterprise Inc., decomposition of ROE

Microsoft Excel
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2022 11.60% = 12.37% × 0.42 × 2.25
Dec 31, 2021 -5.73% = -6.95% × 0.51 × 1.61
Dec 31, 2020 -0.18% = -0.25% × 0.49 × 1.41
Dec 31, 2019 0.16% = 0.17% × 0.63 × 1.56
Dec 31, 2018 6.25% = 6.95% × 0.58 × 1.54

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Net Profit Margin
The net profit margin exhibited significant volatility over the period. Initially, it was positive at 6.95% in 2018, then sharply declined to near zero and negative values through 2019 to 2021, reaching a low of -6.95% in 2021. However, in 2022, it rebounded strongly to 12.37%, indicating a notable recovery and improved profitability.
Asset Turnover
The asset turnover ratio showed a gradual decline overall. Starting at 0.58 in 2018, it initially increased slightly to 0.63 in 2019 but then consistently decreased each year thereafter, falling to 0.42 by 2022. This suggests a reduced efficiency in generating sales from assets over time.
Financial Leverage
Financial leverage remained relatively stable from 2018 to 2019 but decreased in 2020 to 1.41. Subsequently, it rose again in 2021 to 1.61 and increased significantly to 2.25 in 2022. This upward trend in leverage indicates a higher reliance on debt financing in recent years.
Return on Equity (ROE)
ROE followed a similar pattern to net profit margin, with a positive value of 6.25% in 2018 that deteriorated to near zero and negative figures in the following years, even reaching -5.73% in 2021. In 2022, ROE returned to a positive and substantial 11.6%, reflecting improved overall profitability for shareholders.

Five-Component Disaggregation of ROE

Axon Enterprise Inc., decomposition of ROE

Microsoft Excel
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2022 11.60% = 0.75 × 1.00 × 16.56% × 0.42 × 2.25
Dec 31, 2021 -5.73% = — × — × -16.37% × 0.51 × 1.61
Dec 31, 2020 -0.18% = — × — × -0.92% × 0.49 × 1.41
Dec 31, 2019 0.16% = 0.43 × 0.98 × 0.40% × 0.63 × 1.56
Dec 31, 2018 6.25% = 1.04 × 1.00 × 6.71% × 0.58 × 1.54

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Tax Burden
The tax burden ratio shows significant variation over the reported periods, starting at 1.04 in 2018, decreasing sharply to 0.43 in 2019, and then rising again to 0.75 by 2022. Data for 2020 and 2021 are missing, which limits a full assessment of trend continuity during those years.
Interest Burden
The interest burden ratio remains relatively stable, with a slight decrease from 1.00 in 2018 to 0.98 in 2019, and returning to 1.00 in 2022. The intermediate years (2020 and 2021) lack data, but available figures suggest consistent management of interest expenses relative to earnings before interest and taxes over the periods presented.
EBIT Margin
The EBIT margin exhibits considerable volatility, starting at 6.71% in 2018 and then declining dramatically to 0.4% in 2019. The margin turns negative in 2020 (-0.92%) and worsens in 2021 to -16.37%, indicating operational challenges or increased costs during those years. However, in 2022, a notable recovery occurs, with the EBIT margin improving substantially to 16.56%.
Asset Turnover
Asset turnover shows a gradual decline over the period, decreasing from 0.58 in 2018 to 0.42 by 2022. This trend suggests decreasing efficiency in generating revenues from the company's assets over time.
Financial Leverage
The financial leverage ratio increases steadily, starting at 1.54 in 2018 and rising to 2.25 in 2022. This indicates an increasing reliance on debt or borrowed funds to finance the company’s assets, which could amplify both potential returns and risks.
Return on Equity (ROE)
ROE mirrors the fluctuations observed in profitability metrics, declining sharply from 6.25% in 2018 to near zero (0.16%) in 2019, then turning negative in 2020 (-0.18%) and further decreasing to -5.73% in 2021. A significant turnaround occurs in 2022 with ROE rebounding to 11.6%, signaling improved overall profitability and shareholder value creation.

Two-Component Disaggregation of ROA

Axon Enterprise Inc., decomposition of ROA

Microsoft Excel
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2022 5.16% = 12.37% × 0.42
Dec 31, 2021 -3.56% = -6.95% × 0.51
Dec 31, 2020 -0.12% = -0.25% × 0.49
Dec 31, 2019 0.10% = 0.17% × 0.63
Dec 31, 2018 4.06% = 6.95% × 0.58

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Net Profit Margin
The net profit margin exhibited significant fluctuation over the analyzed period. It started at 6.95% in 2018, sharply declined to nearly zero in 2019 at 0.17%, and then turned negative in 2020 and 2021, reaching -0.25% and -6.95% respectively. A notable recovery occurred in 2022, with the margin increasing substantially to 12.37%. This volatility indicates periods of profitability challenges followed by a strong turnaround.
Asset Turnover
Asset turnover showed a generally declining trend. The ratio began at 0.58 in 2018 and experienced a slight increase to 0.63 in 2019. However, from 2020 onwards, there was a steady decrease with figures of 0.49 in 2020, 0.51 in 2021, and further down to 0.42 by 2022. This suggests a reduced efficiency in generating revenue from assets over the latter years.
Return on Assets (ROA)
Return on assets followed a trajectory that closely mirrored the net profit margin trend. The ROA was positive at 4.06% in 2018, fell sharply to 0.1% in 2019, and then turned negative with -0.12% in 2020 and -3.56% in 2021. A significant rebound was observed in 2022 when ROA rose to 5.16%. This pattern reflects the company's varying ability to generate profit from its assets across the years.

Four-Component Disaggregation of ROA

Axon Enterprise Inc., decomposition of ROA

Microsoft Excel
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2022 5.16% = 0.75 × 1.00 × 16.56% × 0.42
Dec 31, 2021 -3.56% = — × — × -16.37% × 0.51
Dec 31, 2020 -0.12% = — × — × -0.92% × 0.49
Dec 31, 2019 0.10% = 0.43 × 0.98 × 0.40% × 0.63
Dec 31, 2018 4.06% = 1.04 × 1.00 × 6.71% × 0.58

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Tax Burden
The tax burden ratio shows variability across the reported years, starting at 1.04 in 2018, declining significantly to 0.43 in 2019, and then increasing to 0.75 by 2022. Data for 2020 and 2021 are not available, making it difficult to ascertain a full trend, but the partial data suggests some recovery in tax burden by the latest period.
Interest Burden
The interest burden remains relatively stable throughout the years with a slight dip to 0.98 in 2019 but returning to 1 in 2022. This consistency indicates that the company’s interest expenses relative to its earnings before interest and taxes have not fluctuated significantly over this timeframe.
EBIT Margin
The EBIT margin exhibits high volatility over the analyzed period. It declines sharply from a positive 6.71% in 2018 to a marginal 0.4% in 2019, then moves into negative territory at -0.92% in 2020 and deteriorates further to -16.37% in 2021 before rebounding to a strong positive margin of 16.56% in 2022. This pattern reflects a period of operational challenges and losses followed by a substantial operational recovery or improvement in profitability at EBIT level.
Asset Turnover
Asset turnover ratios indicate a gradual decline over the period, starting at 0.58 in 2018 and fluctuating slightly with 0.63 in 2019, before moving downwards to 0.49 in 2020, 0.51 in 2021, and further decreasing to 0.42 by 2022. This trend suggests decreasing efficiency in utilizing assets to generate revenue over time.
Return on Assets (ROA)
Return on assets follows a pattern similar to EBIT margin, starting at a favorable 4.06% in 2018 and dropping significantly to nearly zero (0.1%) in 2019, then becoming negative in 2020 (-0.12%) and more negative in 2021 (-3.56%). However, ROA improves markedly in 2022, reaching 5.16%, indicating a recovery in the ability to generate net income from the asset base after a period of operating losses.

Disaggregation of Net Profit Margin

Axon Enterprise Inc., decomposition of net profit margin ratio

Microsoft Excel
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2022 12.37% = 0.75 × 1.00 × 16.56%
Dec 31, 2021 -6.95% = — × — × -16.37%
Dec 31, 2020 -0.25% = — × — × -0.92%
Dec 31, 2019 0.17% = 0.43 × 0.98 × 0.40%
Dec 31, 2018 6.95% = 1.04 × 1.00 × 6.71%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Tax Burden
The tax burden ratio shows a fluctuation over the observed periods. It started relatively high at 1.04 in 2018, sharply decreased to 0.43 in 2019, with missing data for 2020 and 2021, and then rose again to 0.75 in 2022. This suggests variability in tax impact on earnings during this timeframe.
Interest Burden
The interest burden ratio remained fairly stable throughout the recorded years. It was 1 in 2018, a slight dip to 0.98 in 2019, followed by missing data in 2020 and 2021, and returned to 1 in 2022, indicating consistent control over interest expenses relative to earnings.
EBIT Margin
There is a noticeable volatility in EBIT margin. The margin decreased drastically from 6.71% in 2018 to a minimal 0.4% in 2019, continued declining into negative territory with -0.92% in 2020 and a further drop to -16.37% in 2021. A significant recovery occurred in 2022, rebounding strongly to 16.56%, indicating a turnaround in operating profitability after substantial challenges.
Net Profit Margin
The net profit margin exhibits a similar pattern to the EBIT margin, reinforcing the trend in overall profitability. It started at 6.95% in 2018, declined to 0.17% in 2019, moved into negative margins of -0.25% in 2020 and -6.95% in 2021, then recovered to a positive 12.37% by 2022. This reflects a period of financial difficulty followed by a robust recovery in net earnings.