I didn't see this one coming. When last we heard from TASER International (NYSE: TASR), the company had just finished reporting a disappointing finish to fiscal 2010 -- sales down 26% in fiscal Q4, gross margin falling, and a sizeable net loss for the year. Sure, the company had just booked some substantial new stun-gun contracts, but since it lost money on every sale it made, I had little hope that TASER would profit from its success.

Imagine my surprise when it did just that. Yesterday, TASER announced that in the first quarter of 2011, it earned a meager but unexpected profit of $20,000. The company not only "broke even" in its first fiscal test of the new year, but also achieved superior profit margins to what it had grossed in Q4, slashed selling, general, and administrative expenses 9%, and cut R&D spending by 33% -- all while achieving a small but significant rise in sales. Kudos.

And the crowd goes wild
TASER's earnings beat inspired acclaim on the Street as well, with analyst firm Craig-Hallum raising its rating on the stock to "buy," and ratcheting up its price target to $6 a share. According to the analyst, TASER's sitting on the cusp of a "$250 million upgrade cycle" as police departments update their stun guns to the latest tech. Craig calls the company's new Axon video-capture technology and Evidence.com digital video warehouse "the future of policing," and believes TASER's "monopoly market position" in stunguns makes the stock an obvious buy today.

I wouldn't go that far. While I'm impressed by TASER's performance, I still have reservations about the stock -- especially now that it costs 12% more than it did pre-earnings. The two big publicly traded gunsmiths, Sturm, Ruger (NYSE: RGR) and Smith & Wesson (Nasdaq: SWHC), do a combined $640 million in business annually. In exchange, the stock market values these companies at $600 million together -- less than one times sales.

Meanwhile, TASER sells less than $90 million worth of stunguns a year, but costs nearly $280 million -- more than three times sales. When you consider that both Sturm and S&W are solidly profitable enterprises, while TASER is still barely breaking even, that doesn't make a lot of sense to me.

While this was a good quarter for TASER, the stock's still a bad deal for investors.

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