Why AeroVironment, Inc. (NASDAQ: AVAV) stock is under pressure

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AeroVironment, Inc. (NASDAQ: AVAV) stock lost over 2.4% on 24th June, 2020 (as of 12:43 pm GMT-4  ; Source: Google finance) despite decent results for the fourth quarter of FY 20. Cash, cash equivalents and investments, at the end of the fourth quarter of fiscal 2020 stood at $317.7 million, which represents a decrease of $14.9 million from the end of fiscal 2019 of $332.6 million. The decrease in cash, cash equivalents and investments was mainly due  to the acquisition of Pulse Aerospace as well as the increased investment in the HAPSMobile joint venture.

During fiscal 2020, the company had successfully completed the initial flight tests of the HAWK30 solar-HAPS system, secured the largest U.S. Army LMAMS order to date for the Switchblade system, successfully demonstrating a larger variant of Switchblade, progressing in the development of next generation autonomy capabilities and growing the international customer base to 50 allied nations. The company had reported net income attributable to AeroVironment for the fourth quarter of fiscal 2020 of $17.5 million compared to $5.7 million for the fourth quarter of fiscal 2019. As of April 30, 2020, funded backlog (remaining performance obligations under firm orders for which funding is currently appropriated to the company under a customer contract) was $208.1 million compared to $164.3 million as of April 30, 2019. Net inventory at the end of fiscal 2020 had fallen to $45.5 million compared to $54.1 million at the end of fiscal 2019 due to the significant increase in product revenue that occurred in the fourth quarter of fiscal 2020.

AVAV in the fourth quarter of FY 20 has reported the adjusted earnings per share of 72 cents, while adjusted revenue growth of 54 percent to $135 million in the fourth quarter of FY 20. The revenue grew due to an increase in product revenue of $37.4 million and an increase in contract services revenue of $9.9 million.

For fiscal 2021, the Company expects the revenue to be in the range of $390 million and $410 million, operating margin expected to range between 12% and 12.5%, and earnings per diluted share is expected to be in the range of $1.65 to $1.85. This financial guidance assumes about 7% ownership of the HAPSMobile joint venture. The Company expects non-GAAP earnings per diluted share, which excludes amortization of acquired intangible assets, to be in the range of $1.74 and $1.94.

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