Surging Earnings Estimates Signal Upside For AeroVironment (AVAV) Stock

By Zacks Investment ResearchStock MarketsMar 27, 2020 12:20AM ET

www.investing.com/analysis/surging-earnings-estimates-signal-upside-for-aerovironment-avav-stock-200519725

Surging Earnings Estimates Signal Upside For AeroVironment (AVAV) Stock

By Zacks Investment Research | Mar 27, 2020 12:20AM ET

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AeroVironment (AVAV) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this maker of unmanned aircrafts, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For AeroVironment, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $0.69 per share, which is a change of +165.38% from the year-ago reported number.

Over the last 30 days, the Zacks Consensus Estimate for AeroVironment has increased 80.87% because five estimates have moved higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $1.77 per share represents a change of +1.72% from the year-ago number.

The revisions trend for the current year also appears quite promising for AeroVironment, with four estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 8.81%.

Favorable Zacks Rank

Thanks to promising estimate revisions, AeroVironment currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

AeroVironment shares have added 7.4% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.

AeroVironment, Inc. (AVAV): Free Stock Analysis Report

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Zacks Investment Research

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Surging Earnings Estimates Signal Upside For AeroVironment (AVAV) Stock

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