Shares of AeroVironment (AVAV), the leading dronemaker, surged an impressive 19% in after-hours trading on Monday following its announcement of stellar fourth-quarter earnings that significantly surpassed Wall Street's top and bottom-line estimates.
The company delivered a remarkable performance, reporting adjusted earnings of $1.84 per share, comfortably beating the LSEG analyst consensus of $1.46 per share. Revenue also doubled year-over-year, hitting $642 million against an analyst projection of $559 million.
CEO Wahid Nawabi expressed confidence in AeroVironment's market position, stating in a press release that the company is "well positioned to benefit from the rising global demand in drones, counter-drones and space technology."
A significant highlight was the growth of AeroVironment's funded backlog, which reached $1.2 billion – a 65% increase from the previous year, and a slight rise from the $1.1 billion reported in the preceding quarter. Revenue from autonomous systems proved particularly strong, totaling $492 million, far exceeding StreetAccount's expectation of $402 million.
Nawabi recently provided CNBC's Morgan Brennan with an exclusive tour of the company's Simi Valley, California, facility, where he discussed how conflicts in Ukraine and Iran have fundamentally altered modern warfare.
"We knew that this inflection point was going to happen sooner or later," Nawabi commented. "And these last couple of conflicts that have become globally well known has essentially brought this thing to the forefront."
For the fourth quarter of fiscal year 2026, AeroVironment recorded a net income of $63.17 million, or $1.25 per share, a substantial increase from $16.66 million, or 59 cents per share, in the same period a year prior.
Looking ahead, the dronemaker projects fiscal year 2027 revenue to be in the range of $2.13 billion to $2.23 billion, aligning closely with LSEG's estimate of $2.17 billion. However, its guidance for adjusted 2027 EPS was set between $3.02 and $3.34, falling below LSEG's expectation of $3.94 per share.
Despite its shares being down over 40% year-to-date, the company sees immense future opportunities, particularly with the U.S. Defense Department's drone budget potentially exceeding $75 billion next year.
"Not only the U.S. Department of War, but all of our allies are behind the eight ball in terms of adoption and deployment," Nawabi told CNBC, emphasizing the urgent need for defense modernization. "Now we're playing catch-up. Our military is playing catch-up in a very fast pace."
AeroVironment stock chart.
