GoPro vs. AgEagle Aerial Systems: Which Drone Stock is a Better Buy?

GoPro, Inc. (GPRO) develops and sells cameras, drones, and mountable and wearable accessories globally. The San Mateo, Calif.-based company offers cloud-connected HERO7 Silver, HERO7 Black, HERO8 Black, and HERO9 Black waterproof cameras. In comparison, AgEagle Aerial Systems, Inc. (UAVS) in Neodesha, Kans., designs, develops, produces, distributes, and supports uncrewed aerial vehicles for the precision agriculture industry worldwide. The company offers FarmLens and HempOverview.

The ongoing global semiconductor chip shortage and supply chain disruptions have impacted most industries, and the drone industry is no exception. However, governments worldwide have been initiating favorable measures, and companies have been ramping up production to meet the growing demand for chips. In addition, the rising adoption of drones in the agriculture, media and entertainment, oil and gas, insurance, and construction industries is driving the drone market's growth. Furthermore, the development of customized and technologically advanced drone variants is expected to further propel the growth of the market for drones in the coming months. Indeed, according to Valuates Reports, the global drones market is expected to grow at a 3.9% CAGR  between 2021 - 2027. As a result, both GPRO and UAVS should benefit.

GPRO stock has gained 9.7% in price over the past month versus UAVS’ negative returns. Also, GPRO’s 26.9% gains year-to-date compare with UAVS’ negative returns. Moreover, GPRO is the clear winner with 30.1% gains versus UAVS’ negative returns in terms of their past nine months’ performance.

But which of these two stocks is a better buy now? Let’s find out.

Latest Developments

On November 4, 2021, Nicholas Woodman, GPRO's founder, and CEO, said, "GoPro had an outstanding third quarter with strong revenue, earnings, margin, and cash flow growth that have led us to raise our margin and profitability outlook for the year."

On November 8, UAVS announced the launch of MicaSense’s most pioneering drone sensor innovation: Altum-PT. Brandon Torres Declet, UAVS’ CEO, said, “We are very proud of the success we have achieved through market adoption of our legacy products and are excited about again raising the bar on drone sensor excellence through our newest market entrants.”

Recent Financial Results

GPRO’s revenues increased 13% year-over-year to $317 million for its fiscal third quarter, ended September 30, 2021. The company’s non-GAAP net income grew 77.4% year-over-year to $55 million. Also, its non-GAAP EPS came in at $0.34, up 70% year-over-year.

UAVS’ revenues increased 169% year-over-year to $2.02 million for the fiscal third quarter, ended September 30, 2021. However, its net loss grew 550% year-over-year to $3.77 million. Also, its loss per share was  $0.05, up 400% year-over-year.

Past Financial Performance

GPRO’s revenue and total assets have grown at CAGRs of 0.7% and 17.5%, respectively, over the past three years. In comparison, UAVS’ revenue and total assets have grown at CAGRs of 314.5% and 163.2%, respectively, over the past three years.

Profitability

GPRO’s $1.13 billion trailing-12-month revenue is significantly higher than UAVS’ $5.79 million. GPRO is also more profitable, with EBITDA  and net income margins of 10.05% and 32.19%, respectively, compared to UAVS’ negative returns.

Furthermore, GPRO’s ROE, ROA, and ROTC are 103.99%, 7.63%, and 11.12%, respectively, compared to UAVS’ negative values.

Valuation

In terms of trailing-12-month P/S, UAVS is currently trading at 24.22x, which is 1,605.6% higher than GPRO’s 1.42x. Furthermore, UAVS’ 21.67x trailing-12-month EV/S ratio  is 1,541.7% higher than GPRO’s 1.32x.

So, GPRO is relatively affordable here.

POWR Ratings

GPRO has an overall B rating, which equates to a Buy in our proprietary POWR Ratings system. In contrast, UAVS has an overall F rating that translates to Strong Sell. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

GPRO has a B grade for Value, which is consistent with its 1.32x trailing-12-month EV/S, which is 10.6% lower than the 1.47x industry average. However, UAVS has an F grade for Value, which is in sync with its 21.67x trailing-12-month EV/S, which is  973.1% higher than the 2.02x industry average.

Furthermore, GPRO has a B grade for Quality. This is justified given GPRO's 1.29% trailing-12-month asset turnover ratio, which is 22.5% higher than the 1.05% industry average. In comparison, UAVS has a Quality grade of F, which is in sync with its 0.08% trailing-12-month asset turnover ratio, which is 89.4% lower than the 0.79% industry average.

Of the 51 stocks in the Technology - Hardware industry, GPRO is ranked #20. However, UAVS is ranked last among  78 stocks in the Industrial – Machinery industry.

Beyond what I have stated above, we have also rated the stocks for Growth, Momentum, Stability, and Sentiment. Click here to view all the GPRO ratings. Also, get all the UAVS ratings here.

The Winner

The drone industry is expected to grow quickly with increasing demand this year and beyond. And while both GPRO and UAVS are expected to gain, we think it is better to bet on GPRO now because of its robust financials, lower valuation, and higher profitability.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Technology - Hardware industry here. Also, click here to access all the top-rated stocks in the Industrial – Machinery industry.

Click here to check out our Industrial Sector Report for 2021

GPRO shares were trading at $10.76 per share on Thursday afternoon, down $0.03 (-0.28%). Year-to-date, GPRO has gained 29.95%, versus a 26.34% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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