Earnings stock to watch: AeroVironment, Inc. (NASDAQ: AVAV)

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AeroVironment, Inc. (NASDAQ: AVAV) stock rose over 0.1% on 4th December, 2019 (as of 9:42 am GMT-5 ; Source: Google finance) after the company posted better than expected results for the second quarter of FY 20. The company reported the net income from continuing operations attributable to AeroVironment for the second quarter of fiscal 2020 of $7.5 million compared to $7 million for the second quarter of fiscal 2019. The company has generated the cash, cash equivalents, restricted cash and investments at the end of the second quarter of fiscal 2020 of $310.9 million, which is a decrease of $21.7 million from the end of fiscal 2019 of $332.6 million. This decrease in cash was mainly due to the acquisition of Pulse Aerospace, as well as the increased investment in the HAPS Mobile joint venture.

The company has funded backlog of $146.7 million, which was 10% lower than last year, but remain high compared to historical averages. The company had recently announced the contract award from the US Army for Raven Systems, radio frequency modification worth up to $55 million. This contract award for FCS is one of six domains awarded as part of the Army’s $248.5 million, small UAS program announced in April 2018. Overall, AVAV has won four of the six domains associated with this program and is the only supplier to the Army for FCS, Raven spare parts, Puma spare parts and other major components.

AVAV in the second quarter of FY 20 has reported the adjusted earnings per share of 34 cents, beating the analysts’ estimates for the adjusted earnings per share of 30 cents, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 14 percent to $83.3 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $80.1 million. The increase was due to an increase in product deliveries of $10.3 million.

Moreover, inception to-date, revenue under contract for the HAPS program is $103.2 million. The total value of all contracts with HAPS Mobile is $148.9 million, which consists of $140.3 million for the design and development agreement and $8.7 million for preliminary design and other related efforts. There is $45.7 million remaining on these contracts, which includes the portion that is currently unfunded.

Gross profit increased 24%  to $35.2 million over last year. Gross margin was of 42%, 3 points higher than last year, mainly due to more favorable mix in revenue and higher volumes.

AeroVironment expects full-year earnings to be in the range of $1.47 to $1.67 per share, and revenue is expected to be in the range of $350 million to $370 million.

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