TASER International, Inc. Stock Jumps After Earnings Beat

TASER International, Inc. Stock Jumps After Earnings Beat

Taser International is rallying up over 6.5% in early market trading Thursday after the company delivered a solid first quarter earnings report. The international law enforcement supplier reported adjusted earnings per share of $0.13 on revenue of $44.8 million.  Analysts were looking for earnings per share of $0.07 on revenue of $39.96 million.  The earnings beat has added to Taser’s year to date gains, which now stand at 11.78%.

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TASER International, Inc. Stock Jumps After Earnings Beat

Taser new AXON body cameras help push earnings higher

In the news these days, we get a constant barrage of police-involved incidents, which have led to civil unrest such as what we saw recently in Baltimore and Ferguson. The incidents around the US involving police, has led to a strong push from lawmakers to make police body cameras a requirement.  While politicians hammer out the new details, body cameras are increasingly getting support from Main Street as well, which continues to press for accountability of law enforcement.  This new change is a boom for Taser’s AXON business, which creates body cameras specifically made for law enforcement. One major contract Taser got with regards to the AXON cameras, London Police Department offered 178 AXON body cameras during the first quarter.  Additionally, some cities such as North Charleston, North Carolina and Ferguson, Missouri have already made it a requirement for law enforcement to have body camera.

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Strong demand increases margins, share price

In the past year, shares of Taser International are up 83.28%.  A very strong first quarter increased gross margin from 66.4% to 71.1%.  Taser’s move to capture the body camera market was genius and now this business segment stands to post strong growth numbers over the next several years.  Yet, despite the bullish quarter and strong one year performance, Anthony Bozza of Lakewood Capital, recently shared in a letter to investors that his hedge fund is short Taser International.  Bozza highlights a full saturated Taser market for its stun guns and increasing competition with body cameras, as the primary reasons for the short.

Overall, Taser posted some nice numbers and we can really begin to see the importance of the body camera business, which is the source of long term growth for Taser.  The company’s primary business of selling its stun guns is fully ingrained in the markets and now mostly benefits from replacement orders.  However, greater emphasis on body cameras and competition with rivals will allow Taser to stay ahead of the pack.

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