Axon Enterprise, Inc. AXON and Woodward, Inc. WWD are two familiar names operating in the aerospace and defense equipment industry. As rivals, these companies are engaged in producing highly engineered public security and defense solutions in the United States and internationally.
Both companies have been enjoying significant growth opportunities in the public safety and defense industries on account of growing instances of terrorism and criminal activities and the expansionary U.S. budgetary policy. Let’s take a closer look at their fundamentals, growth prospects and challenges.
The Case for Axon
Axon’s Connected Devices segment is thriving on the back of strong demand for TASER devices. Solid demand for virtual reality training services, TASER 10 handle and counter-drone equipment also supports the segment’s growth. Segmental revenues surged 33% year over year in the first quarter of 2026, following an increase of 29.1% in 2025.
The company continues to witness growing popularity for its next-generation TASER 10 products, whose shipment began in 2023. Growth in cartridge revenues, driven by higher adoption of the TASER products, has been driving the segment’s performance.
An increase in the aggregate number of users to the Axon network is aiding the Software & Services segment. After witnessing a year-over-year 39.6% jump in revenues in 2025, revenues from the segment increased 35% in first-quarter 2026. Continued momentum in digital evidence management and increased adoption of its latest software offerings are driving the segment’s growth.
The company is strengthening its foothold in the counter-drone space with the growing capabilities of its Dedrone offerings and Artificial Intelligence (AI)-powered command-and-control platform. It recently launched Dedrone C2, an upgraded version of the Dedrone platform. This C2 version comes with enhanced sensor fusion technology, offering stronger detection capabilities.
AXON has also been focusing on strategic collaborations with other companies to expand its counter-drone capabilities and customer base. Last year, Axon entered into a partnership with TYTAN (a leading provider of interceptor systems for Group 3 drones) to boost detection, identification and mitigation capabilities of counter-drone equipment.
On the flip side, escalating costs and expenses are a concern for Axon’s bottom line. In the first three months of 2026, its cost of sales and SG&A expenses increased 38.8% and 15.9%, respectively, year over year. Total operating expenses climbed 19.6% year over year to $448 million. The company incurred high costs and expenses related to business integration activities and stock-based compensation expenses.
Axon has been facing the pressure of rising debt levels. Exiting the first quarter of 2026, the company’s long-term notes payable (net) were $1.73 billion. This increase was primarily due to funds raised to support the company’s strategic investments, expansion activities and potential acquisitions. Considering its high debt level, its cash and cash equivalents of $458.9 billion do not look impressive.
The Case for Woodward
Woodward’s Aerospace business is gaining momentum with strength in the commercial aftermarket as well as higher defense activity, despite supply-chain challenges. In the second quarter of fiscal 2026 (ended March 2026), net sales for the segment were up 25% year over year, driven by broad-based strength across commercial services and defense OEM. Driven by strength across its business, Woodward projects its Aerospace segment to grow 21–24% in fiscal 2026 (ending September 2026), up from the earlier estimated 15–20% range.
The company’s Industrial business segment continues to benefit from solid demand for power generation equipment and services, along with favorable conditions in marine transportation and steady investment in parts of oil and gas. In the fiscal second quarter, Industrial sales increased 20% year over year, with Core Industrial sales up 19% excluding China on-highway. For fiscal 2026, Woodward expects consolidated net sales to rise 20-23%, with the Industrial segment anticipated to increase 18-20%.
The company’s disciplined capital deployment remains focused on organic growth, returning cash to shareholders and pursuing strategic acquisitions. As part of this strategy, the company is making a multiyear investment in a new state-of-the-art facility to support the Airbus A350 spoiler actuation program and long-term organic growth. Also, it closed the acquisition of Valve Research & Manufacturing in March 2026. The buyout will complement Woodward’s engineering, design and manufacturing capabilities in fuel and motion control systems.
During the first six months of fiscal 2026, the company returned $391.1 million to its shareholders in the form of $35.8 million of dividends and $355.3 million of share repurchases. Also, in November 2025, WWD’s board approved a new $1.8 billion share repurchase authorization over three years, underscoring confidence in the company’s strong balance sheet and long-term growth outlook.
Its healthy liquidity position adds to its strength. Management continues to guide $300-$350 million of free cash flow for fiscal 2026 and about $290 million of capital expenditures, and highlighted inventory initiatives are intended to improve cash generation in fiscal 2027.
Price Performance
Image Source: Zacks Investment Research
In the past six months, Axon shares have lost 18.7%, while Woodward stock has gained 24.4%.
The Zacks Consensus Estimate for AXON & WWD
The Zacks Consensus Estimate for AXON’s 2026 sales and earnings per share (EPS) implies year-over-year growth of 31.5% and 14.3%, respectively. The EPS estimates for both 2026 and 2027 have been stable over the past 60 days.
Image Source: Zacks Investment Research
The consensus estimate for WWD’s fiscal 2026 sales implies growth of 21.2% year over year, while the EPS estimate implies a 35.6% increase. WWD’s EPS estimates for fiscal 2026 and 2027 (ending September 2027) have remained unchanged over the past 60 days.
Image Source: Zacks Investment Research
Woodward’s Valuation Attractive Than Axon
Woodward is trading at a forward 12-month price-to-earnings ratio of 40.15X, while Axon’s forward earnings multiple sits much higher at 52.27X.
Image Source: Zacks Investment Research
Conclusion
Axon’s strong momentum across operational segments and growing presence in the counter-drone space have been dented by rising expenses and a high debt level, which might affect its margins and performance. Also, AXON’s expensive valuation warrants a cautious approach for existing investors.
In contrast, Woodward’s market leadership position and strength in aerospace and industrial businesses provide it with a competitive advantage to leverage the long-term demand prospects in the market. WWD holds robust prospects due to strong estimates, stock price appreciation, attractive valuation and solid prospects for sales and profit growth.
Given these factors, WWD seems to be a better pick for investors than AXON currently. While WWD currently carries a Zacks Rank #2 (Buy), AXON has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Woodward, Inc. (WWD): Free Stock Analysis Report
Axon Enterprise, Inc (AXON): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).