Please ensure Javascript is enabled for purposes of website accessibility

Why AeroVironment Stock Popped 10.4% in September

By Rich Smith - Oct 4, 2017 at 4:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

August's rise was easy to explain, but what happened to this stock in September?

What happened

Small drone aircraft-maker AeroVironment (AVAV -0.01%) entered into September on a high note -- then promptly fell asleep. Reporting earnings on August 30, 2017, AeroVironment boasted of strong, 21% sales growth. Although the company lost money in the quarter, it lost far less than it had guided investors to expect, sparking an 18% rally in the stock and setting up AeroVironment for a great September to follow.

Instead, AeroVironment basically tread water for the next two weeks before finally showing signs of life again in mid-September. A couple of positive news items later, the stock ended up gaining a respectable 10.4% for the month.

So what

There were two things that brought AeroVironment stock back to life mid-month. First, on September 19, AeroVironment announced that its small "efficient energy systems" division -- which builds electric power-charging equipment for vehicles -- had been chosen to serve "as an official North American provider of BMW and MINI-branded TurboCord accessory EV chargers." With this announcement, AeroVironment says it is now "a preferred integrated North American home charging solution supplier" for nine of the world's biggest automakers.

The stock gained 5% on the day this news was announced. It proceeded to rise from there through the tail end of the month, including enjoying a modest rise in price upon the announcement that the U.S. Army had placed a small order for additional Switchblade UAVs on September 27.

Man on scooter driving up a red arrow

Despite little news in September, AV stock just kept motoring higher. Image source: Getty Images.

Now what

Sadly, October isn't looking as propitious for AeroVironment. Although the stock initially rose as October began, its ascent appears to have stalled. Today, for example, AeroVironment stock is down 2.8%.

Why? Your guess is as good as mine, as there's no news of note to clearly explain the decline. That said, with AeroVironment stock up more than 120% over the past year already, it could simply be the case that investors are starting to think the stock's valuation is a bit stretched. Even with analysts forecasting strong, 27.5% annual earnings growth for the company, at 63 times earnings, AeroVironment stock is looking priced to sell.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AeroVironment, Inc. Stock Quote
AeroVironment, Inc.
AVAV
$83.07 (-0.01%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.