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Bull Of The Day: AeroVironment (AVAV)

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AeroVironment (AVAV - Free Report) is a Zacks Rank #2 (Strong Buy) and it is the Bull of the Day today.  Let's take a look at the recent moves in estimates and why it has seen a strong move in it's Zacks Rank.

Description

AeroVironment, Inc. designs, develops, produces, operates a portfolio of products and services for government agencies, businesses and consumers. It operates through two segments: Unmanned Aircraft Systems, which focuses primarily on the design, development, production, support and operation of UAS and tactical missile systems that provide situational awareness, multi-band communications, force protection and other mission effects, and Efficient Energy Systems, which focuses primarily on the design, development, production, support and operation of electric energy systems. The Company supplies UAS, tactical missile systems and related services primarily to organizations within the United States Department of Defense. The Company also supplies charging systems and services for electric vehicles, and power cycling and test systems to commercial, consumer and government customers. It serves the U.S. Department of Defense, including the U.S. Army, Marine Corps, Special Operations Command, Air Force, and Navy.

Earnings History

AVAV has topped the Zacks Consensus Estimate in three of the last four quarters.  The most recent report was a miss, and a big one.  The company reported a loss of a penny when the Zacks Consensus Estimate was calling for a gain of 17 cents.  This translated into a negative earnings surprise of -105%.

Prior to that report, the comapny had topped the Zacks Consensus Estimate in the three previous quarters.  Those beats were all pretty substantial so the average positive earnings surprise over the last four quarters is +5.7%

Estimate Revisions

AVAV has seen estimates moving higher.  The Zacks Consensus Estimate for 2020 has moved from $1.63 to $1.77 in the span of about 4 weeks.  

Over that same time horizon, the Zacks Consensus Estimate for 2021 moved from $1.83 to $1.94.

When earnings estimates move higher, the Zacks Rank tends to follow suit.

Another Drone Name For Your Radar Screen

I am always on the hunt for small growth names that show great potential.  In the drone space I have found one in DraganFly (DFLYF) - which is very small but shows great promise.

The company recently did a deal with AVAV and for those that are looking for lower price points for exposure to the drone space, this name is certainly worth a deeper look.

You can learn more about that company on its website (https://draganfly.com/) -- the company will get a Zacks Rank when there is research on the firm.

Valuation

At 30x forward earnings, AVAV is somewhat richly valued.  At the same time a 2.6x price to book isn't that bad and there could still be room for growth in terms of the price to sale multiple of 4x.  

Margins have been slipping of late and if that continues, earnings estimates could be challenged.  Look for AVAV to get back on track soon as the virus outbreak is more of an opportunity than anything else for the entire drone space.

 

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