AeroVironment (AVAV - Free Report) shares edged slightly lower but fared better than broader markets Tuesday, just one day before the drone maker is scheduled to release its latest quarterly earnings results. Wall Street’s top drone stock is carrying immense momentum into its report, but what are investors excepting from the company? Let’s take a closer look.
AeroVironment designs, develops, manufacturers, and supports a diverse portfolio of what it calls unmanned aircraft systems (UAS). The company’s UAS devices are what regular folks would call a “drone” and are typically marketed for defense purposes. Recently, AeroVironment has expanded its line of electric vehicle charging stations.
Investors have clearly liked what AeroVironment has been doing lately, as shares of the company have surged about 75% in the past year, including a nice 16% rally in the past month alone. In its most recent earnings report, AVAV reported per-share profits which beat the Zacks Consensus Estimate by more than 63%, inspiring much of its recent momentum.
AeroVironment will hope to deliver another solid quarter to continue its recent share price success. According to our latest Zacks Consensus Estimates, analysts expect AVAV to deliver adjusted earnings of $0.06 per share and revenue of $75.64 million. These results would represent year-over-year growth rates of 132% and 73%, respectively.
But investors will also hope AeroVironment can advance its earnings surprise streak, as the drone maker has yet to miss bottom-line estimates in the past six quarters. To predict whether this will happen, we can turn to our Earnings ESP figure.
Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.
This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
AVAV is currently a Zacks Rank #3 (Hold), but its Earnings ESP sits at 0%, so our model is inconclusive. Nevertheless, we can bet that Wall Street will be hoping for a strong beat-and-raise quarter after its recent momentum. It is also worth noting that AVAV is now trading at 75x forward 12-month earnings, a steep premium compared to its industry’s average.
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