NEW YORK (TheStreet) -- Drone maker AeroVironment (AVAV) shares are up 14% to $35.29 on Wednesday following the release of the company's fourth quarter earnings results.
Aerovironment reported earnings of 27 cents per share, four cents better than Capital IQ had anticipated, while also reporting a year over year 35.8% revenue jump to $73.5 million during the fourth quarter.
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TheStreet Ratings team rates AEROVIRONMENT INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AEROVIRONMENT INC (AVAV) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 47.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- AVAV has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 6.24, which clearly demonstrates the ability to cover short-term cash needs.
- AEROVIRONMENT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AEROVIRONMENT INC reported lower earnings of $0.46 versus $1.37 in the prior year. This year, the market expects an improvement in earnings ($0.48 versus $0.46).
- Powered by its strong earnings growth of 188.23% and other important driving factors, this stock has surged by 61.15% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Aerospace & Defense industry and the overall market, AEROVIRONMENT INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: AVAV Ratings Report