In June 2019, AeroVironment, Inc. (NASDAQ:AVAV) released its latest earnings announcement, which indicated that the business experienced a strong tailwind, leading to a high double-digit earnings growth of 93%. Investors may find it useful to understand how market analysts view AeroVironment's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts' expectations for next year seems pessimistic, with earnings decreasing by a double-digit -16%. However, the next few years show a contrast, with earnings growth becoming positive in 2021, with the bottom line increasing to US$43m in 2022.
While it’s useful to be aware of the rate of growth each year relative to today’s figure, it may be more beneficial to analyze the rate at which the company is rising or falling on average every year. The advantage of this method is that we can get a bigger picture of the direction of AeroVironment's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.3%. This means that, we can anticipate AeroVironment will grow its earnings by 6.3% every year for the next few years.
For AeroVironment, I've compiled three pertinent factors you should further examine:
- Valuation: What is AVAV 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 AVAV is currently mispriced by the market.
- Future Earnings: How does AVAV's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AVAV? 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 firstname.lastname@example.org. 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.