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AeroVironment, Inc. (NASDAQ:AVAV): Earnings To Drop Next Year

Simply Wall St

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On 30 April 2019, AeroVironment, Inc. (NASDAQ:AVAV) announced its latest earnings update. Overall, analyst consensus outlook appear bearish, as a 16% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 42%. Presently, with latest-twelve-month earnings at US$42m, we should see this fall to US$35m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for AeroVironment

How will AeroVironment perform in the near future?

The longer term expectations from the 6 analysts of AVAV is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of AVAV's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NasdaqGS:AVAV Past and Future Earnings, June 27th 2019

By 2022, AVAV's earnings should reach US$43m, from current levels of US$42m, resulting in an annual growth rate of 6.3%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $1.76 in the final year of forecast compared to the current $1.77 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 13% to 8.8% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For AeroVironment, there are three fundamental aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is AeroVironment worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AeroVironment is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of AeroVironment? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.