Reasons to Add AeroVironment (AVAV) to Your Portfolio Now
AeroVironment Inc. AVAV is a defense contractor that provides a technologically-advanced portfolio of intelligent, multidomain robotic systems and related services to government agencies and businesses. Its product portfolio includes unmanned aircraft systems, tactical missile systems and unmanned ground vehicles. The company’s stable financial position and increasing demand due to global tensions make it a strong candidate for investment in the defense space.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for AVAV’s fiscal 2024 earnings per share (EPS) is pegged at $2.80. The bottom-line estimates have moved up 1.1% in the past 90 days.
The Zacks Consensus Estimate for current-year sales is pegged at $681.34 million, indicating growth of 26.1% from the 2022 reported figure.
AVAV delivered a trailing four-quarter average earnings surprise of 47.23%.
Debt Position
The total debt-to-capital of AVAV is 18.28%, better than 51.23% registered by the industry. This indicates that the company has less debt than its peers, which is a positive sign.
AVAV has a current ratio of 4.79, better than the industry’s average of 1.16. This implies that the company has sufficient financial capability to pay its short-term debt obligations.
Strong Backlog and Increasing Demand
The solid demand for AeroVironment’s products resulted in a total backlog of $487 million as of Oct 28, 2023.
The future military forces are expected to include more distributed, intelligent and affordable unmanned systems (UMS). AeroVironment has an unmatched portfolio of these solutions with shipment to more than 55 allied countries. During the fiscal second quarter of 2024, AVAV witnessed 115% year-over-year revenue growth in its UMS segment, reflecting the solid demand that its UMS enjoys in the defense space.
Return on Equity (ROE)
ROE is a measure of a company’s financial performance and shows how it is utilizing its funds. AVAV’s current ROE is 13.5%, better than the industry’s average of 11.4%, which indicates that the company is utilizing its funds more efficiently than its peers.
Price Performance
In the past year, AVAV’s shares have rallied 54% compared with the industry’s average growth of 15.1%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks in the same sector are TransDigm Group Inc. TDG, Textron Inc. TXT and CurtissWright Corp. CW. Each stock carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
TDG boasts a long-term earnings (three-to-five-years) growth rate of 16.3%. The Zacks Consensus Estimate for fiscal 2024 sales is pegged at $7.59 billion, implying an improvement of 15.3% from the fiscal 2023 reported figure.
The Zacks Consensus Estimate for fiscal 2024 EPS is pegged at $32.44, reflecting a surge of 25.5% from the fiscal 2023 reported figure.
TXT boasts a long-term earnings growth rate of 11.7%. The Zacks Consensus Estimate for 2023 sales is pegged at $13.7 billion, implying a year-over-year improvement of 6.4%.
The Zacks Consensus Estimate for 2023 EPS is pegged at $5.48, reflecting an increase of 36.7% from the 2022 reported figure.
The Zacks Consensus Estimate for CW’s 2023 EPS is pegged at $9.15, implying a year-over-year improvement of 12.6%. It delivered an average earnings surprise of 4.83% in the past four quarters.
The Zacks Consensus Estimate for 2023 sales is pegged at $2.80 billion, reflecting a rise of 9.4% from the 2022 reported figure.
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AeroVironment, Inc. (AVAV) : Free Stock Analysis Report
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