AeroVironment
AVAV
$158.73
+5.57%
AeroVironment is a defense technology company that designs and manufactures autonomous systems, precision strike weapons, counter-drone solutions, and cyber/electronic warfare capabilities for military customers. As a leading provider of unmanned aircraft systems (UAS) and loitering munitions, it holds a distinct competitive position in the rapidly expanding defense robotics market. The stock is currently under intense scrutiny following a 49% year-over-year price decline, driven by a mixed earnings report that showed record revenue but a GAAP net loss, while analysts debate whether the pullback is overdone given a $2.7 billion backlog and a $500 million Army counter-drone contract.…
AVAV
AeroVironment
$158.73
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Investment Opinion: Should I buy AVAV Today?
Rating: Hold. AeroVironment is a speculative growth stock with strong revenue momentum but negative earnings and cash flow. The analyst consensus is Buy with an average target of $232.88, implying 63.8% upside, but the stock's 49% decline and technical downtrend warrant caution. The core thesis is that the $2.7 billion backlog and $500 million Army contract will drive future profitability, but execution risk is high.
Supporting Evidence: Revenue grew 133% YoY to $641.6 million in Q4, and forward PS of 2.16x is at a 14% discount to the industry average, suggesting the market expects growth. However, the trailing PS of 4.84x is a 94% premium, and the company has negative EPS (-$0.03 TTM) and negative free cash flow. The forward PE of 31.4x based on estimated EPS of $7.4 implies high expectations. The PEG ratio of 0.08 suggests the stock is cheap relative to growth, but this is based on forward estimates that may be optimistic.
Risks & Conditions: The biggest risks are failure to achieve profitability, backlog conversion delays, and valuation compression. This Hold would upgrade to Buy if the stock breaks above $165 resistance and reports a profitable quarter with positive free cash flow. It would downgrade to Sell if revenue growth decelerates below 20% or if the backlog shrinks. Overall, AeroVironment is fairly valued on forward metrics but overvalued on trailing metrics, making it a 'show me' story.
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AVAV 12-Month Price Forecast
AeroVironment is a high-growth defense tech company with strong top-line momentum and a massive backlog, but it is not yet profitable and trades at a premium on trailing sales. The stock's 49% decline reflects market skepticism about its path to profitability. The base case of 45% probability assumes gradual improvement, leading to a target of $233. The bull case (30%) requires a clean profitability inflection, while the bear case (25%) reflects execution risk. The neutral stance balances the compelling growth story against the financial risks. An upgrade to bullish would require a quarter with positive net income and free cash flow; a downgrade to bearish would follow a significant contract loss or margin collapse.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on AeroVironment's 12-month outlook, with a consensus price target around $231.68 and implied upside of +46.0% versus the current price.
Average Target
$231.68
0 analysts
Implied Upside
+46.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$166 - $326
Analyst target range
AeroVironment is covered by 18 analysts, with a consensus recommendation of 'Buy' (mean rating of 1.65 on a 1-5 scale where 1 is Strong Buy). The average price target is $232.88, implying approximately 63.8% upside from the current price of $142.20. The distribution leans heavily bullish, with recent ratings from Citizens (Market Outperform), Canaccord Genuity (Buy), BTIG (Buy), Needham (Buy), and Piper Sandler (Overweight) reaffirmed in July 2026. The target range spans from a low of $166.00 to a high of $326.00. The high target of $326 assumes a return to prior valuation levels driven by backlog conversion and margin expansion, while the low target of $166 still implies 16.8% upside, suggesting that even the most bearish analyst sees value at current levels. The relatively wide spread ($160) indicates high uncertainty about the timing and magnitude of future earnings growth. Recent analyst actions have been predominantly positive, with no downgrades in the past month, reinforcing the bullish consensus. However, the stock's significant underperformance relative to the market suggests that the market is discounting these optimistic forecasts, possibly due to concerns about execution risk or the lumpy nature of defense contracts.
Bulls vs Bears: AVAV Investment Factors
AeroVironment presents a high-risk, high-reward opportunity. The bull case rests on record revenue growth, a massive backlog, and strong analyst support, with 63.8% upside to the average target. However, the bear case highlights negative earnings, free cash flow burn, a 49% stock decline, and a premium valuation on trailing sales. The single most important tension is whether the company can convert its $2.7 billion backlog into profitable, cash-generating revenue. If it does, the stock could re-rate significantly; if not, further downside is likely. Currently, the bearish evidence from price action and financials is more immediate, but the long-term potential from defense tailwinds keeps the debate balanced.
Bullish
- Record Revenue Growth of 133% YoY: In Q4 FY2026, revenue surged to $641.6 million, a 133% year-over-year increase, driven by strong demand in Autonomous Systems. This top-line acceleration demonstrates the company's ability to capitalize on defense spending tailwinds.
- Massive $2.7B Backlog and $500M Army Contract: AeroVironment holds a $2.7 billion backlog and recently won a $500 million Army counter-drone contract, providing multi-year revenue visibility. These contracts underpin the forward revenue estimates of $4.42 billion, supporting the bullish thesis.
- Analyst Consensus Buy with 63.8% Upside: The average analyst price target is $232.88, implying 63.8% upside from the current price of $142.20. With 18 analysts and a mean rating of 1.65 (Strong Buy to Buy), the Street is overwhelmingly bullish.
- Improving Gross Margins and Path to Profitability: Gross margin improved to 39.6% in Q4 FY2026 from 17.1% in Q3, and diluted EPS turned positive at $1.25. If revenue growth continues and operating leverage kicks in, the company could achieve sustained profitability.
Bearish
- Negative Net Income and Free Cash Flow: Despite record revenue, the company reported a net loss of $24.1 million in Q4 and trailing twelve-month free cash flow of -$123.1 million. Negative earnings and cash burn raise sustainability concerns.
- Stock Down 49% in One Year, Technical Downtrend: The stock has fallen 49% over the past year and is trading near its 52-week low of $135.20. The 1-month relative strength versus the S&P 500 is -15.2%, indicating persistent selling pressure and company-specific headwinds.
- Lumpy Revenue and Uneven Profitability: Revenue has been erratic: $408M, $472.5M, $454.7M, and $641.6M over the last four quarters. Operating margins swung from -31.0% in Q4 to -5.1% in Q3, reflecting the lumpy nature of defense contracts and high operating expenses.
- High Valuation on Trailing Sales: The trailing price-to-sales ratio is 4.84x, a 94% premium to the Aerospace & Defense industry average of ~2.5x. If growth disappoints, the multiple could contract sharply, leading to further downside.
AVAV Technical Analysis
AeroVironment is in a sustained downtrend, with the stock price falling 49% over the past year and currently trading at 34% of its 52-week range (close to the low of $135.20). The price sits at $142.20, just 5% above the 52-week low, indicating persistent selling pressure and a lack of buyer conviction near these levels. The 1-year price change of -48.95% and the 6-month change of -63.80% confirm a prolonged bearish phase, with the stock making lower lows and lower highs throughout the period. Short-term momentum remains negative, with a 1-month price change of -14.91% and a 3-month change of -25.71%, both accelerating to the downside. The 1-month relative strength versus the S&P 500 is -15.22%, showing significant underperformance. This divergence from the broader market (SPY up 0.31% in the past month) suggests company-specific headwinds rather than a macro-driven selloff, and the lack of a bullish reversal pattern indicates that sellers remain in control. The 52-week high of $417.86 and low of $135.20 define a wide trading range. A break below the $135 support level would signal further downside, potentially targeting the next psychological level near $120. Conversely, a move above the recent resistance at $165 (the June 30 spike high) would be the first sign of a potential trend reversal. With a beta of 1.395, the stock is 39.5% more volatile than the S&P 500, meaning it amplifies market moves—a factor that increases risk for position sizing but also offers greater upside potential in a recovery scenario.
Beta
1.40
1.40x market volatility
Max Drawdown
-66.7%
Largest decline past year
52-Week Range
$135-$418
Price range past year
Annual Return
-41.8%
Cumulative gain past year
| Period | AVAV Return | S&P 500 |
|---|---|---|
| 1m | +6.5% | +0.6% |
| 3m | -19.1% | +3.4% |
| 6m | -48.4% | +7.1% |
| 1y | -41.8% | +16.4% |
| ytd | -38.0% | +8.3% |
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AVAV Fundamental Analysis
Revenue surged 133% year-over-year to $641.6 million in the most recent quarter (Q4 FY2026), driven by strong demand in the Autonomous Systems segment, which includes UAS and loitering munitions. However, the growth trajectory is uneven: the prior three quarters saw revenues of $408.0M, $472.5M, and $454.7M, indicating a lumpy order pattern typical of defense contracts. The full-year revenue run rate has clearly accelerated, but the sustainability of this pace depends on continued contract awards and backlog conversion. Despite the top-line explosion, the company reported a net loss of $24.1 million in Q4, resulting in a net margin of -3.76%. Gross margin improved to 39.6% in Q4 from 17.1% in Q3, but operating margin was deeply negative at -31.0% due to high operating expenses, including $114.2 million in SG&A and $31.5 million in R&D. The trailing twelve-month net income is negative, with an EPS of -$0.03, though the Q4 diluted EPS was $1.25, showing a sharp sequential improvement. The company is not yet consistently profitable, but the narrowing losses and expanding gross margins suggest a path toward profitability if revenue growth continues. AeroVironment has a debt-to-equity ratio of 0.19, indicating low leverage, and a current ratio of 4.30, reflecting strong short-term liquidity. However, free cash flow over the trailing twelve months was -$123.1 million, and the company has relied on external financing (equity issuance of $967 million in Q1 FY2026) to fund operations and acquisitions. The return on equity is -6.02%, and the negative free cash flow yield (-122.1x price-to-cash-flow) highlights that the company is not yet self-sustaining. The cash balance of $377.3 million provides a buffer, but continued negative FCF could pressure the stock if growth decelerates.
Quarterly Revenue
$641616000.0B
2026-04
Revenue YoY Growth
+133.3%
YoY Comparison
Gross Margin
39.6%
Latest Quarter
Free Cash Flow
$-123069000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is AVAV Overvalued?
Since net income is negative (TTM net loss), the price-to-sales (PS) ratio is the primary valuation metric. The trailing PS ratio is 4.84x, while the forward PS (based on estimated revenue of $4.42 billion) is approximately 2.16x, implying the market expects significant revenue growth to justify the current price. The gap between trailing and forward PS suggests that investors are pricing in a dramatic expansion in sales, which is consistent with the recent revenue surge and backlog growth. Compared to the Aerospace & Defense industry average PS of roughly 2.5x, AeroVironment's trailing PS of 4.84x represents a 94% premium. However, the forward PS of 2.16x is actually at a 14% discount to the industry average, indicating that the market expects the company to grow into its valuation. This premium/discount dynamic reflects the high growth expectations embedded in the stock, but also the risk that if growth disappoints, the multiple could contract sharply. Historically, AeroVironment's PS ratio has ranged from about 13x to 33x over the past two years, with the current trailing PS of 4.84x near the bottom of its historical range. The historical PS low was around 4.0x (in early 2023), suggesting the stock is trading at a valuation that has previously marked a trough. This could indicate a value opportunity if the company's growth trajectory is intact, but it could also signal deteriorating fundamentals if the market is correctly pricing in lower future growth.
PE
-36.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 28x~223x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-32.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: AeroVironment's most pressing financial risk is its negative net income and free cash flow. In Q4 FY2026, the company reported a net loss of $24.1 million despite record revenue, and trailing twelve-month free cash flow was -$123.1 million. The operating margin was deeply negative at -31.0% in Q4, driven by $114.2 million in SG&A and $31.5 million in R&D. While the company has low debt (D/E 0.19) and strong liquidity (current ratio 4.30), continued cash burn could pressure the stock if growth decelerates. The reliance on equity issuance ($967 million in Q1 FY2026) to fund operations highlights the need for improved profitability.
Market & Competitive Risks: The stock is trading at a trailing PS ratio of 4.84x, a 94% premium to the industry average, making it vulnerable to valuation compression if growth slows. With a beta of 1.395, the stock amplifies market moves, and its 49% decline over the past year shows it is already pricing in significant headwinds. Competitive risks include emerging drone manufacturers and potential disruption from new technologies. Recent news about AEVEX's $320M IPO and VisionWave's counter-drone announcements indicate a crowded field, though AeroVironment's established contracts provide a moat.
Worst-Case Scenario: In a severe downturn, the stock could retest its 52-week low of $135.20, representing a 5% decline from the current price of $142.20. However, if the company fails to convert its backlog into profitable revenue and faces contract cancellations or margin compression, the downside could extend to $120 (historical support), implying a 15.6% loss. The maximum drawdown over the past year was -66.65%, so a repeat of that magnitude would bring the stock to around $47.50, though this is unlikely given the backlog and analyst support.
FAQ
The key risks are: 1) Financial risk: negative net income and free cash flow of -$123 million TTM, with operating margins as low as -31%. 2) Valuation risk: trailing PS of 4.84x is a 94% premium to the industry, leaving room for multiple compression. 3) Execution risk: the $2.7 billion backlog must be converted into profitable revenue; any delays or cancellations could hurt the stock. 4) Macro risk: with a beta of 1.395, the stock is highly sensitive to market downturns and defense budget changes. The most severe risk is a failure to achieve profitability, which could drive the stock below its 52-week low of $135.20.
The 12-month outlook is balanced among three scenarios. The base case (45% probability) sees the stock reaching the analyst average target of $232.88, driven by continued revenue growth and gradual margin improvement. The bull case (30% probability) targets $200-$326, assuming a profitability inflection and positive free cash flow. The bear case (25% probability) targets $120-$166, if execution falters and growth decelerates. The most likely scenario is the base case, where the company converts its backlog into revenue but remains unprofitable for a few more quarters. The stock's current price of $142.20 offers a favorable risk/reward if the base case materializes.
AeroVironment's valuation is mixed. On a trailing basis, the price-to-sales ratio of 4.84x is a 94% premium to the Aerospace & Defense industry average of 2.5x, suggesting overvaluation. However, the forward PS ratio of 2.16x is at a 14% discount to the industry, implying the market expects significant revenue growth. The forward PE of 31.4x based on estimated EPS of $7.4 is high but not extreme for a growth company. Historically, the stock's PS ratio has ranged from 4x to 33x, so the current level is near the bottom of its historical range, which could indicate value. Overall, the stock is fairly valued on forward metrics but overvalued on trailing metrics, reflecting the market's pricing of future growth.
AeroVironment presents a high-risk, high-reward opportunity. The stock is down 49% over the past year and trades near its 52-week low of $135.20, but analysts see 63.8% upside to the average target of $232.88. The company has record revenue growth of 133% YoY and a $2.7 billion backlog, but it is not yet profitable, with negative free cash flow of -$123 million. For aggressive investors with a long-term horizon who believe in the defense drone megatrend, it could be a good buy at current levels. However, conservative investors should wait for evidence of sustained profitability and positive free cash flow before entering.
AeroVironment is better suited for long-term investment (3-5 years) due to its high volatility (beta 1.395) and speculative nature. The company is in a growth phase with negative earnings, making it unsuitable for short-term trading unless one can time the market. The stock has declined 49% over the past year and is in a downtrend, so short-term momentum is negative. Long-term investors can benefit from the defense drone megatrend and backlog conversion, but they must tolerate significant price swings. A minimum holding period of 3 years is recommended to allow the company to achieve profitability and for the market to re-rate the stock.