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Category: Stock Market and AeroVironment
Date: 6 September 2019 Stock Price: $55.33 We take a look at the 1st quarter earnings for their 2020 fiscal year of AeroVironment the unmanned aircraft systems (drone) builder.
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About AeroVironment
AeroVironment is a technology solutions provider that designs, develops, produces and supports an advanced portfolio of unmanned aircraft systems (UAS). Agencies of the U.S. Department of Defense and allied military services use the company's battery-powered, hand-launched unmanned aircraft systems extensively to provide situational awareness to tactical operating units through real-time, airborne reconnaissance, surveillance and communication. AeroVironment trades on the NASDAQ Global Market under the symbol "AVAV."
Financial overview of AeroVironment's latest earnings report
The numbers we are interested in (for the quarter):
- Revenue: $86.911 million (up from $78.043 million from the same quarter of the previous year)
- Cost of sales : $45.639 million (up from $45.454 million for the same quarter of the previous year)
- Net income: $17.99 million (down from $27.330 million for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 24.069 million (up from 24,010 million for the same quarter of the previous year)
- Diluted net income per share: $0.71 (down from $0.85 for the same quarter of the previous year)
- PE ratio: 35.5 (based on the earnings guidance for the 2020 fiscal year)
- Cash and cash equivalents: $137.094 million
- Cash and cash equivalents per share: $5.69
- Cash and cash equivalents makes up 10.29% of AeroVironment's current market capital
- Cash and cash equivalents makes up 25.64% of AeroVironment's total assets
- Accounts receivable: $42.724 million
- Accounts receivable makes up 7.99% of AeroVironment's total assets
- Inventories: $56.366 million
- Inventories makes up 10.5% of AeroVironment's total assets
- Total shareholders' equity of AeroVironment's: $481.499 million
- Shareholders' equity per share: $20
- Cash generated from operations: $17.099 million
- Cash generated from operations per share: $0.71
AeroVironment's management commentary on the results and earnings guidance
SIMI VALLEY, Calif.--(BUSINESS WIRE)--Sep. 4, 2019-- AeroVironment, Inc. (NASDAQ: AVAV) today reported financial results for its first quarter ended July 27, 2019.
“Our team delivered outstanding first quarter results of $87 million in revenue, $0.71 and $0.74 in GAAP and non-GAAP earnings per diluted share, respectively, and funded backlog of $165 million,” said Wahid Nawabi, AeroVironment president and chief executive officer. “Strong performance globally in our small unmanned aircraft systems product line reflects our continued leadership in this category, which will benefit further from our newly acquired VAPOR unmanned helicopter solutions. We now have visibility into the timing of U.S. Army orders for our Switchblade tactical missile systems, and we are making great progress in our HAPS program, with ground testing underway and flight testing about to begin. Across our business, we are executing our plans and delivering results that support our current year guidance and long-term value creation objectives.”
BACKLOG
As of July 27, 2019, funded backlog (remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $165.2 million compared to $157.0 million as of July 28, 2018.
FISCAL 2020 — OUTLOOK FOR THE FULL YEAR
For fiscal 2020, the Company continues to expect to generate between $350 million and $370 million in revenue and between $1.35 and $1.55 in earnings per diluted share. This financial guidance assumes approximately 5% ownership of the HAPSMobile joint venture and includes the expected losses of Pulse Aerospace, which the Company acquired on June 10, 2019. The Company continues to expect non-GAAP earnings per diluted share, which excludes acquisition related expenses and amortization of acquired intangible assets to be between $1.47 and $1.67.
The foregoing estimates are forward looking and reflect management's view of current and future market conditions, including certain assumptions with respect to our ability to obtain and retain government contracts, changes in the timing and/or amount of government spending, changes in the demand for our products and services, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates.
The image below shows some of the business highlights for AeroVironment for the first quarter of their 2020 fiscal year as obtained from their supplementary presentation accompanying their latest earnings report.
- Revenue of $86.9 million, up 11 percent year-over-year
- Earnings per diluted share of $0.71 down $0.14 year-over-year; non-GAAP earnings per diluted share of $0.74, up $0.15 year-over-year
- Funded backlog of $165.2 million, an increase of five percent year-over-year
“Our team delivered outstanding first quarter results of $87 million in revenue, $0.71 and $0.74 in GAAP and non-GAAP earnings per diluted share, respectively, and funded backlog of $165 million,” said Wahid Nawabi, AeroVironment president and chief executive officer. “Strong performance globally in our small unmanned aircraft systems product line reflects our continued leadership in this category, which will benefit further from our newly acquired VAPOR unmanned helicopter solutions. We now have visibility into the timing of U.S. Army orders for our Switchblade tactical missile systems, and we are making great progress in our HAPS program, with ground testing underway and flight testing about to begin. Across our business, we are executing our plans and delivering results that support our current year guidance and long-term value creation objectives.”
BACKLOG
As of July 27, 2019, funded backlog (remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $165.2 million compared to $157.0 million as of July 28, 2018.
FISCAL 2020 — OUTLOOK FOR THE FULL YEAR
For fiscal 2020, the Company continues to expect to generate between $350 million and $370 million in revenue and between $1.35 and $1.55 in earnings per diluted share. This financial guidance assumes approximately 5% ownership of the HAPSMobile joint venture and includes the expected losses of Pulse Aerospace, which the Company acquired on June 10, 2019. The Company continues to expect non-GAAP earnings per diluted share, which excludes acquisition related expenses and amortization of acquired intangible assets to be between $1.47 and $1.67.
The foregoing estimates are forward looking and reflect management's view of current and future market conditions, including certain assumptions with respect to our ability to obtain and retain government contracts, changes in the timing and/or amount of government spending, changes in the demand for our products and services, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates.
The image below shows some of the business highlights for AeroVironment for the first quarter of their 2020 fiscal year as obtained from their supplementary presentation accompanying their latest earnings report.
AeroVironment (NASDAQ: AVAV) stock price history
The image below, obtained from Google shows the stock price history of AeroVironment over the last 5 years. And its been a good, all be it volatile time for the stock over the last 5 years. 5 years ago the stock traded at $31 and its currently trading at 55.33. That's a healthy return of 78.5% over the last 5 years. But the stock is trading at well below its 52 week high of $121.32 and is actually trading at pretty close to its 52 week low. A clear sign that the short term sentiment towards the stock is overwhelmingly negative.
AeroVironment (NASDAQ: AVAV) latest stock valuation
So based on AeroVironment's latest earnings report and fiscal guidance for their 2020 fiscal year what do we value the group's stock at? Our valuation models provides a target price (full value price) for AeroVironment of $41.45. So we believe that AeroVironment's stock is overvalued and we expect to see continued weakness in the group's stock price until it reaches levels closer to our target price. We would not recommend long term fundamental or value investors buying into this stock at its current price but rather at levels about 10% below our full value price So we see a good buying price for AeroVironment at $37 a stock.