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AeroVironment (AVAV) Gains But Lags Market: What You Should Know

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AeroVironment (AVAV - Free Report) closed the most recent trading day at $51.52, moving +0.04% from the previous trading session. This move lagged the S&P 500's daily gain of 1.27%. At the same time, the Dow added 1.25%, and the tech-heavy Nasdaq gained 1.48%.

Heading into today, shares of the maker of unmanned aircrafts had lost 6.11% over the past month, lagging the Aerospace sector's gain of 1.69% and the S&P 500's loss of 4.37% in that time.

Wall Street will be looking for positivity from AVAV as it approaches its next earnings report date. This is expected to be September 4, 2019. In that report, analysts expect AVAV to post earnings of $0.35 per share. This would mark a year-over-year decline of 40.68%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $85.25 million, up 9.24% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.53 per share and revenue of $359.58 million, which would represent changes of -12.07% and +14.42%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for AVAV. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. AVAV is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, AVAV is currently trading at a Forward P/E ratio of 33.66. This valuation marks a premium compared to its industry's average Forward P/E of 22.91.

It is also worth noting that AVAV currently has a PEG ratio of 1.35. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Aerospace - Defense Equipment was holding an average PEG ratio of 2.07 at yesterday's closing price.

The Aerospace - Defense Equipment industry is part of the Aerospace sector. This group has a Zacks Industry Rank of 76, putting it in the top 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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