Why AeroVironment Stock Dropped 11% This Morning

Shares of drone maker AeroVironment (NASDAQ: AVAV) tumbled more than 11% in morning trading Wednesday, after Barron's published a piece questioning whether the stock's strong price performance -- it has more than doubled in the past 12 months -- is justified. Despite the tenuous justification for the morning's decline, it largely appears to be sticking. AeroVironment stock remained down 9.4% as of 11:24 AM EST.

AeroVironment stock has gone up a lot. Does that mean now it has to come back down? Image source: Getty Images.

Barron's pointed out  that AeroVironment's "sales have been in a stall for years" and that its "free cash flow has recently been scarce" -- both are arguments that are hard to deny. The $265 million in revenue that AeroVironment collected last year was only $800,000 more than it collected in 2015, and amounted to a mere 5% increase over the past three years. Moreover, AeroVironment generated no free cash flow whatsoever in 2015 or 2016, and its trailing 12 month results show total cash profit of only $1.8 million -- just 9% of AeroVironment's $19.7 million reported GAAP profit for the period.

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Source: Fool.com