DroneShield Ltd (ASX: DRO) shares are enjoying a strong day of outperformance today.
Shares in the S&P/ASX 300 Index (ASX: XKO) drone defence company closed down 3.8% at 76.5 cents on Friday. In early afternoon trade on Monday, shares are changing hands for 78.5 cents apiece, up 2.6%.
For some context, the ASX 300 is just about flat at this same time.
Despite today's uptick, as you can see on the chart above, DroneShield shares remain down around 22% since this time last month. However, over the longer term, shares are up 124% over 12 months.
So, after the past month's sell-down, is the ASX drone defence stock now in bargain territory?
What's been happening with the ASX tech stock?
Turning to the most recent financial metrics at hand, DroneShield reported its third-quarter results on 25 October, with the DroneShield share price closing down 1.6% on the day.
On the positive side of the ledger, quarterly cash receipts of $9.1 million were up 18% year on year and marked an all-time high for the company's third quarter. It also brought year-to-date cash receipts to $30.5 million, up 20% from the first nine months of FY 2023.
On the negative side, the company's year-to-date revenue of $31.1 million was down 20% from the same period in FY 2023.
However, management noted that if you included products already delivered and scheduled for the fourth quarter, worth some $24.1 million, then year-to-date FY 2024 revenue would actually work out to $55.2 million.
Time to snap up DroneShield shares?
I've come out with some bullish assessments for the long-term outlook of DroneShield shares before.
And nothing has happened since then to materially change that outlook.
At its third-quarter results, management said the company has a sales pipeline in the range of $1.1 billion. And the balance sheet is strong, with DroneShield holding no debt and a cash balance of $238.3 million at the end of the third quarter.
I also remain optimistic about the barely tapped potential of the artificial intelligence revolution to increase the company's anti-drone capabilities and possibly bring down costs over the medium to longer term.
And with little sign that global conflicts are abating, DroneShield shares should continue to get ongoing support from ongoing tensions in the Middle East, where drone attacks are increasingly common.
Then there's Russia's grinding war with Ukraine. Only last night, Russia reportedly launched one of its largest missile and drone attacks on Ukraine since its invasion.
As DroneShield stated in its third quarter update, "Ukraine, Middle Eastern and other global conflicts substantively use small drones."
Management noted that this was "driving significant innovation in small drone warfare and, as a result, innovation in counter-drone systems."
While DroneShield shares could certainly slide from current levels in the short term, over the longer term, I believe the company is well-placed to deliver ongoing growth for years to come.
The post Down 22% in a month, is now a golden opportunity to buy DroneShield shares? appeared first on The Motley Fool Australia.
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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