AeroVironment (AVAV) Moves 18.3% Higher: Will This Strength Last?

AeroVironment (AVAV) shares ended the last trading session 18.3% higher at $214.39. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1.2% loss over the past four weeks.

AeroVironment benefits from autonomous military strike systems, including Switchblade loitering munitions and Red Dragon attack drones, along with counter-drone and electronic warfare technologies. By combining AI-enabled autonomy, precision targeting, and command-and-control software, the company is positioned to benefit from rising demand for portable, rapidly deployable precision warfare systems.

The new $20 million Air Force Research Laboratory contract strengthens AeroVironment beyond its traditional drone and loitering-munition business by expanding its role in advanced defense materials and aerospace R&D. This creates a new high-margin research revenue stream and deepens long-term relationships with the U.S. Air Force and Space Force. 

This maker of unmanned aircrafts is expected to post quarterly earnings of $1.53 per share in its upcoming report, which represents a year-over-year change of -5%. Revenues are expected to be $566.61 million, up 106% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For AeroVironment, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on AVAV going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

AeroVironment is a member of the Zacks Aerospace - Defense Equipment industry. One other stock in the same industry, Teledyne Technologies (TDY), finished the last trading session 3.5% higher at $634.06. TDY has returned -2.9% over the past month.

Teledyne's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $5.79. Compared to the company's year-ago EPS, this represents a change of +11.4%. Teledyne currently boasts a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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