Remember how you felt when your newborn kitten first opened his eyes? When your baby first said "Mama" or took her first steps? At The Motley Fool, we get similar warm fuzzies when a newborn public company reports its first earnings release. On Thursday, we'll hear from one such firm, as unmanned aerial vehicle maker AeroVironment (NASDAQ:AVAV) reveals how it did this past fiscal third quarter 2007.

What analysts say:

  • Buy, sell, or waffle? Four analysts -- each of which played midwife to AeroVironment at its January IPO -- have just begun rating this firm. The tally now stands at one buy and three holds.
  • Revenues and earnings. So far, none of the analysts has yet gone on record with either sales or earnings estimates.

What management says:
We'll leave discussions of management's plans, and its views of the prospects for the business, for future quarters -- when we've got something more to judge them against. Today, let's just slowly start getting to know this Nasdaq newcomer.

AeroVironment has two primary business lines (but it's working on some more). The two lines consist of (1) manufacturing what it calls "small unmanned aircraft systems" -- which everybody else calls "unmanned aerial vehicles," or " UAVs;" and (2) manufacturing "fast charge systems for electric industrial vehicle batteries."

How skeptical should Foolish investors be of whiz-bang technology? Ask investors in Aventine Renewable Energy (NYSE:AVR) or VeraSun (NYSE:VSE) about their experiences investing in the ethanol boom. I, for one, have to think that both of AeroVironment's business lines hold promise. On the one hand, you've got a technology that can save lives by keeping soldiers out of harm's way, validated by investments from major defense players like Northrop Grumman (NYSE:NOC). On the other, you've got a play on the current electric car obsession of big-time automakers like Ford (NYSE:F), GM (NYSE:GM), and Toyota (NYSE:TM). So the technologies hold promise -- we just need to keep an eye on the price we pay to participate in that promise and insist that these guys make a profit.

What management does:
Fortunately for investors, unlike many whiz-bangers who float their stock on the public markets, AeroVironment is profitable. As new as it is to the concept of reporting its numbers publicly, we don't really have enough data to make meaningful long-term comparisons of rolling numbers. Instead, I'll just give you below the numbers for how it's done in each of the past six quarters.

Margins

7/05

10/05

1/06

4/06

7/06

10/06

Gross

36.5%

41.3%

42.3%

42.3%

38.0%

39.3%

Operating

6.8%

19.7%

11.5%

11.5%

6.4%

17.4%

Net

4.4%

14.1%

5.8%

5.8%

4.3%

10.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects quarterly performance for the quarters ended in the named months -- NOT trailing-12-month data.

One Fool says:
One thing you'll notice in these numbers (comparing the July and October 2006 quarters against their 2005 counterparts), it appears that the company suffered erosion in both operating and net margins. This was, however, to be expected. Operating costs, and operating margins, include the cost of paying lawyers and accountants to get a company ready for its IPO. As a result, the quarters leading up to a firm's going public often show a bit of weakness as the "professional services" bills come due.

The good news for investors? Further down the road, this will make for easier "comps," as future quarters' performance gets compared to the depressed performance of the last few months. So as artificially bad as the trend looks right now, it will all even out in a few months time when it starts looking artificially good.

Learn more about AeroVironment in:

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Fool contributor Rich Smith does not own shares of any company named above.