"If wishes were fishes, I'd cast my net in the sea."

So goes the old saw, and it's particularly appropriate this week, as we review the earnings at Motley Fool Rule Breakers recommendation AeroVironment (Nasdaq: AVAV) -- which owes its strong post-earnings run-up largely to investors wishing it will deliver on its promises.

Last week, AeroVironment revealed that in fiscal Q2 2011, the company had grown its revenue 24% year over year, and that this was just about the only thing it had grown during the quarter. Operating income and net both dropped 88%. Earnings per share fell 90%, as AV earned just a penny-a-share in its fiscal second quarter.

Reviewing the quarter, AV CEO Tim Conver boasted that these results equate to "strong execution" that "exceeded our forecast, keeping us on track for our fiscal year 2011 plan." And this, dear Fool, is the real story at AV: After losing money and burning cash through the first half of this year, AV's telling us everything's gonna change in the second half. Appearances to the contrary notwithstanding, Conver assures us that: "For fiscal year 2011, the Company reaffirms its expectation to achieve revenue growth of 10% to 15% over fiscal year 2010, with an operating income margin between 10% and 12%."

Get your nets ready ...
That's such a bold statement, that I'll repeat: AV is saying it will turn its business around in the second half, and in dramatic fashion. It will out-operating-margin UAV rivals Boeing (NYSE: BA) and Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC) and Textron (NYSE: TXT) -- none of which earn better than a single-digit operating margin. By year end, AV will produce $275 million in revenue -- minimum -- and operating profits as high as $34.5 million (max). Tax that at, say, 35%, and we could be looking at maybe $22 million in net profits this year -- about $1 of profit per share!

Now for the bad news
Now, here's why this news, initially so bullish, wasn't enough to secure the shares' post-earnings gains: Even $1 a share will leave this company priced north of a 26 P/E. That's a good price if management achieves Wall Street's expected 28% annual long-term growth -- but to do that, everything has to go right for AV. Literally. Everything.

I wish 'em the best, certainly. But personally, I'm keeping my nets dry.

AeroVironment is a Motley Fool Rule Breakers selection, but Fool contributor Rich Smith no longer owns the shares. The Motley Fool has a disclosure policy.

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