Introduction
$AeroVironment(AVAV)$ AeroVironment, Inc. (AVAV) is a small-cap company that operates in the unmanned aircraft systems (UAS) industry. The company provides various solutions such as small UAS, tactical missile systems, electric vehicle charging and test systems, and other related services. Recently, the company has been in the news due to its strong earnings performance, which has propelled the stock price upward. In this article, we will discuss the latest earnings results, financials, potential, and stock performance of AVAV.
GIF from GIPHY (https://media.giphy.com/media/1Ej92iP6oMffy/giphy.gif)
AVAV Latest Earnings Results and Financials
On 6 March, 2023, AeroVironment reported its third-quarter fiscal 2023 earnings results. The company reported a revenue of $167.2 million, which is a 30% increase year over year. Additionally, the company reported earnings per share of $1.40, which is a 60% increase year over year. The strong earnings performance was primarily driven by the company's UAS business, which saw a 42% increase in revenue compared to the same period last year. The company's gross margin also improved from 42.3% to 44.8%. The stock closed 4.24% higher on 7 March 2023 as shown in the K-line chart below.
AVAV stock spiked after recent earnings (shown in K-chart)
AVAV Potential with Countries Gearing Up for Potential Conflicts
The recent war between Russia and Ukraine has highlighted the potential effectiveness of unmanned aircraft systems in combat. The use of UAS has become increasingly common in modern warfare due to their ability to gather intelligence, conduct reconnaissance, and carry out targeted strikes. This trend is likely to continue as countries gear up for potential conflicts and relationships between nations continue to deteriorate. AeroVironment is well-positioned to benefit from this trend as a leading provider of UAS solutions.
AVAV portfolio of Unmanned Systems
AVAV Stock Performance Over the Years
Over the years, the AVAV stock has seen its fair share of ups and downs. During the pandemic stock boom, the stock went as high as $143.72, but it has since come down to earth, with a low of $52.03. The recent war in Ukraine has propelled the stock to as high as $114.11. As of March 11, 2023, the stock has stayed up 60% from its lows in Feb 2022, and it is up 5.7% year to date compared with 4% for the S&P500. The near term support level is around 80, drawn with technical analysis tool on Tiger Trade PC platform as shown below.
Estimating Fair Value for AVAV
The fair value of AVAV can be estimated using a discounted cash flow (DCF) model. The DCF model takes into account the company's future cash flows and discounts them back to their present value. Based on this model, the fair value of AVAV is estimated to be $99per share, which is above its current market price of $90. This suggests that the stock is slightly undervalued and has room for growth especially if picked up when the broader market is expected to decline further.
Conclusion
In conclusion, AeroVironment, Inc. is a company that operates in a promising industry with significant potential for growth. The recent strong earnings performance and the potential for increased demand for UAS solutions in modern warfare are positive signs for the company's future prospects. However, investors should exercise caution when trading such a small-cap stock, as it can be volatile and subject to significant fluctuations in price. Overall, AVAV presents an exciting opportunity for investors seeking exposure to the UAS industry.
@CaptainTiger GIF is taken from GIPHY. Thank you
Comments