Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and AeroVironment (NASDAQ:AVAV) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

With sequestration becoming a reality, any company related to the defense industry is facing tough times. Yet AeroVironment plays a vital role in the defense effort with its advances in unmanned aircraft, and it also has a promising civilian commercial business as well. Let's take an early look at what's been happening with AeroVironment over the past quarter and what we're likely to see in its quarterly report on Tuesday.

Stats on AeroVironment

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$89 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will AeroVironment fly higher this quarter?
Analysts haven't been sure about AeroVironment's earnings prospects over the past few months. They've reined in consensus earnings-per-share for the just-ended quarter by more than a dime and also cut their fiscal 2014 estimates as well. The stock has climbed nearly 10% since early December, although it's down from the levels it hit right after its most recent earnings announcement.

Unmanned aerial vehicles have been a huge growth area for the defense industry. Even as defense budget cuts seem imminent, the Pentagon has ramped up spending on UAVs, and both AeroVironment and defense contractors Northrop Grumman (NYSE:NOC) and Lockheed Martin (NYSE:LMT) have taken full advantage of the trend with their unmanned offerings. Yet as drones expand beyond traditional military operations for use in other applications such as domestic surveillance, AeroVironment will want to position itself to take maximum advantage of expanded use of its products.

Moreover, AeroVironment has shifted its focus toward the electric-car business, with its fast-charging stations geared toward helping buyers of electric vehicles keep them at maximum potential. Given the limited ranges on some electric cars, AeroVironment's equipment will be essential for many users. Moreover, as new EVs from Tesla (NASDAQ:TSLA) hit the market, a general upswing in EV-demand could lead to explosive growth for AeroVironment.

In AeroVironment's quarterly report, watch for guidance about the potential impact of sequestration on the company. In the long run, though, as long as the U.S. doesn't make a major foreign policy shift, AeroVironment's products shouldn't fall out of favor anytime soon.

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