Drone-Maker Stock AIRO Jumps on Earnings Beat

Through its Electric Air Mobility segment, Jaunt Air Mobility, AIRO’s new presence at Quebec’s YMX Innovation Centre enables real-world testing, regulatory validation, and rapid deployment of certified cargo drone solutions, reinforcing its leadership in sustainable aerospace. (Business Wire)

Aerospace-and-defense start-up AIRO Group got a boost from better-than-expected second-quarter earnings.

The drone maker, on Thursday morning, reported adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, of $4.7 million and diluted earnings per share of 30 cents on sales of $24.6 million. Wall Street was looking for Ebitda of negative $4.8 million and adjusted earnings per share of 11 cents on sales of $14 million, according to FactSet.

Drone sales, at $22 million, drove the beat, rising 216% year over year.

The consensus, however, was an average of two analysts. That isn’t much of a consensus. Overall, three analysts cover the stock. An industrial company in the S&P 500 has an average of more than 20 analysts covering it. AIRO, however, is too small to be in the index and is also relatively new, having completed its initial public offering in June.

Shares have done well. The IPO price was $10. Shares closed Wednesday at $21.74.

The stock was up after earnings, but gave back some gains, closing at $22.94—up 5.5%. The S&P 500 and Dow Jones Industrial Average finished close to flat.

At current prices, AIRO is valued at almost six times estimated 2025 sales. Unmanned defense-technology companies AeroVironment and Kratos Defense & Security Solutions trade for about eight and nine times estimated 2025 sales, respectively.

Both are larger than AIRO: AeroVironment’s sales in 2025 are expected to reach $1.6 billion. Its Puma drones compete with AIRO’s Sky Watch surveillance drones. AeroVironment is also in the process of acquiring BlueHalo, which makes comparisons difficult. Kratos’s sales in 2025 are expected to reach about $1.3 billion.

Shares of AeroVironment and Kratos were up 56% and 105%, respectively, over the past three months. Drones got a boost from the Defense Department’s announcement that it would deploy more unmanned systems faster in July.

AIRO, with its 150-plus employees, operates in four business segments: drones, avionics, training, and electric air mobility. Avionics refers to flight controls. Electric air mobility refers to eVTOL, or electric vertical takeoff and landing aircraft, a segment that has yet to generate sales. AIRO is planning to build hybrid drones for cargo markets, a little like a last-mile delivery truck in the air. They could hit the market by 2027.

Most of the revenue comes from the drone business. The company’s artificial-intelligence-enabled Sky Watch drones are sold to NATO and used in Ukraine. AIRO will use the IPO funds to acquire additional drone technologies as well as aircraft for its training division. AIRO buys L-39 jets to train U.S. military pilots for close air-support missions.

All three of the analysts covering AIRO stock have Buy ratings. The average Buy-rating ratio for industrial stocks in the S&P 500 is about 50%. The average analyst price target for AIRO stock is about $31.

Kratos and AeroVironment are popular on Wall Street, too. The Buy-rating ratios for those stocks are 82% and 100%, respectively.

Write to Al Root at allen.root@dowjones.com