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Why Shares of AeroVironment, Inc. Popped 23% in December

Drone flying above a field.

What happened

Shares of drone and EV charger manufacturer AeroVironment, Inc. (NASDAQ: AVAV) jumped 23.2% in December, according to data provided by S&P Global Market Intelligence , after the company reported a much better than expected fiscal second-quarter earnings report.

So what

Revenue jumped a whopping 47% versus a year ago to $73.8 million, gross margin improved 700 basis points to 42%, and net income swung from a loss of $4.2 million to a profit of $7.0 million. Funded backlog also increased 49% to $127 million as customers ordered new drones and funded research into new products.

Drone flying above a field.

Image source: Getty Images.

There was a lot to like in the quarter, and management's expectation of $280 million to $300 million of sales for the year and earnings of $0.45 to $0.65 per share are 9% and 2% increases from a year ago, respectively.

Now what

Crushing expectations is great for AeroVironment in the short term, but long-term investors will want to see margins and earnings remain at an elevated level to stick with the stock. The company has a history of boom-and-bust operations, and it looks like we're in a boom time right now. Watch for wider adoption of the company's commercial drone and EV charging products as a sign that a more stable customer base is building. Relying on military customers can be rough on operations, so a broader base of customers developing in 2018 would be a great sign for long-term investors.

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Travis Hoium owns shares of AeroVironment. The Motley Fool recommends AeroVironment. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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