Shares of AeroVironment (AVAV +6.52%) are falling on Wednesday. The company's stock had lost 4.4% as of 2:05 p.m. ET but was down as much as 22.4% earlier in the day. The drop comes as the S&P 500 gained 0.7% and the Nasdaq composite gained 0.9%.
The defense contractor reported earnings yesterday that failed to meet Wall Street's expectations.
NASDAQ: AVAV
Key Data Points
The numbers weren't great
For its fourth quarter, AeroVironment delivered earnings per share (EPS) of $0.30 on sales of $167.6 million, with the latter down 10.2% year over year. Both figures were well off the mark for analyst estimates, with EPS missing by more than 50%.
Its guidance was also a disappointment. AeroVironment lowered its full-year revenue guidance to $787.5 million, a 2.2% decrease from previous guidance. The company also lowered its full-year adjusted EPS guidance by 9.3%.
World events aren't helping
AeroVironment specializes in unmanned aircraft and its products have been heavily used by Ukraine after it was invaded by Russia. The Trump administration has reversed course in the United States' support of the country, halting military aid. The company said its guidance was impacted "most significantly [by] sales to Ukraine."
The company, which has operations in Southern California, said it was also impacted by the recent wildfires.
Valuation troubles
AeroVironment's current financial woes also reveal deeper issues with its valuation. The company's current price-to-earnings ratio (P/E) of 83.5 is significantly higher than most of its defense contracting competition. RTX, for instance, has a P/E of 36.3. I would look elsewhere.
