That stunning roller-coaster of a company, TASER International (NASDAQ:TASR), reports earnings on Wednesday for Q1 2006. After falling from its spectacular highs of late 2004 and spending the past six months climbing up from its recent lows, the company hopes it can really surprise investors with a good earnings report.

What analysts say:

  • Buy, sell, or waffle? TASER is covered by three analysts, and they all have this one pegged as a buy.
  • Revenues. $13.6 million is expected, which is a 33% climb from a year ago -- a far cry from over 200% annual growth seen in periods gone by.
  • Earnings. From a break-even quarter last year, all three analysts have a $0.02 net income per share set for this quarter. We'll see, since the company has come in under expectations for each of the last four quarters.

What management says:
Coming off 2005, in which the company had several wrongful death and personal injury suits dismissed along with the conclusion of an SEC investigation, CEO Rick Smith believes that the company has passed "a turning point in our business." In the earnings announcement for 2005, he was almost giddy, saying, "We have sent a strong message to plaintiff litigators across the country: If you intend to litigate with TASER International, understand that we will fight all the way .We faced these challenges, improved our core business operations, furthered our industry leading research and development programs, and remained profitable. Qualitatively, we are feeling a shift in momentum in our favor. Additionally, new products such as the TASER Cam ... and the newly announced wireless Extended Range Electronic Projectile ... provide significant new upside to our business going forward." We'll see what Mr. Smith has to say on Wednesday.

What management does:
While gross margin has been relatively constant over the past 18 months, operating and net margins have plummeted. 2005 was a rough year, with increased litigation, public relations, and legislative lobbying costs more than doubling sales and general and administrative costs over 2004. Applied to lowered sales, operating and net margins took a major hit.

Margins %

9/04

12/04

3/05

6/05

9/05

12/05

Gross

67.5

66.8

65.3

64.7

63.5

63.3

Op.

47.1

45.1

37.8

29.2

15.7

3.3

Net

28.7

27.9

23.6

18.6

10.4

2.2
All data from annual and quarterly reports as available from the SEC. Corrected forms were used whenever possible. Data reflect trailing-12-month performance for the quarters ended in the named months.

One Fool says:
A non-lethal way of stopping people, either in self-defense, law enforcement, or military endeavors, makes a great product idea. For this high-flying company, though, 2005 was like being zapped by one of its own products -- the stock price collapsed almost as fast as somebody on the receiving end of a TASER. For a company that had been accused of selling its stock price as much as its products, this came as a rude awakening.

Analysts may still be having visions of the company's huge growth period from 2003 through 2004, giving higher earnings estimates than what the company can come through with. If the company has truly passed a turning point, then this quarter may be the beginning of better times. To be sure, I wouldn't jump in quite yet, given past actions of management. Instead, I'm comfortable with a wait-and-see attitude for at least couple more quarters.

Competitors:

  • Law Enforcement Associates (AMEX:AID)
  • Stinger Systems

TASER is a Motley Fool Rule Breakers recommendation. Take the swashbuckling newsletter dedicated to up-and-coming companies in emerging fields for a 30-day free spin.

Fool contributor Jim Mueller does not own shares in any company mentioned.