One-Hour Analysis of Aerovironment

From Value Line

  • AVAV has only been public since 2007
  • Founder a “beloved aeronautical pioneer”
  • Went public at $20, shot to $40, now back near $20
  • Not that cheap at over 15x earnings
  • In two growth-oriented areas, drones and electric cars
  • Clean book value
  • Plenty of cash
  • Has not done any buybacks
  • Insiders own 17%, unusual for this industry, but have been sellers recently
  • Is electric car business subsidized, or does it have real economics?
  • No pension issues
  • ROE still only 10%

From Footnotes

  • Really good competition sections with specific names of competitors
  • Electric vehicle sales to lift truck makers
  • No signs of government subsidies in the electric vehicle business
  • Unmanned aircraft systems  aim at small side of market
  • Heavily tied to Army, could be a problem as wars end
  • Some production is outsourced

From Google Finance

  • 2 buys, and 10 holds, very high for a company this small
  • Perhaps indicative it is being followed by alternative energy analysts
  • No real value owners, Citadel owns 500,000 shares

From Seeking Alpha

  • Very useful 2011 interview about electric vehicles
  • Some interest when the stock was higher

Conclusion

We need to learn more about this company.  The extra cash can be a big competitive advantage.  However, we remain concerned this company was able to come pubic as an alternative energy company, and is slowly bleeding the money it raised.

We don’t mind earnings misses, but AVAV miss of the last quarter does call into question management competence.  (a loss of .17 vs expected EPS of .37 for the quarter) However, with the stock down 20% in an up market, we will to dig further

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About Gregg Jahnke