AeroVironment, Inc. (AVAV) | Investment Case

1. Company Snapshot

1.a. Company Description

AeroVironment, Inc.designs, develops, produces, delivers, and supports a portfolio of robotic systems and related services for government agencies and businesses in the United States and internationally.It operates through four segments: Unmanned Aircraft Systems (UAS), Tactical Missile System (TMS), Medium Unmanned Aircraft Systems (MUAS), and High Altitude Pseudo-Satellite Systems (HAPS).

The company supplies UAS, TMS, unmanned ground vehicle, and related services primarily to organizations within the U.S. Department of Defense and to international allied governments.It also designs, engineers, tools, and manufactures unmanned aerial and aircraft systems, including airborne platforms, payloads and payload integration, ground control systems, and ground support equipment and other items and services related to unmanned aircraft systems.In addition, the company offers small UAS products, including spare equipment, alternative payload modules, batteries, chargers, repair services, and customer support, as well as multiple aircraft, hand-held ground control system, and spare parts and accessories.

Further, it develops high-altitude pseudo-satellite UAS systems.The company was incorporated in 1971 and is headquartered in Arlington, Virginia.

Show Full description

1.b. Last Insights on AVAV

Breaking News: AeroVironment Inc recently made headlines with its counter-drone technology. One Wall Street analyst initiated coverage with a buy rating and defended the stock's valuation. The company's technology has garnered significant attention. The U.S. Department of Defense requested $66 billion in IT spending for fiscal 2026. AeroVironment's stock price reached $264.63 at the latest close. Analysts are optimistic about the company's prospects. A buy rating was recently assigned to the stock by one analyst.

1.c. Company Highlights

Last Price	264.63
Change Percentage	-6.05%
Open	280.54
Previous Close	281.67
Market Cap ( Millions)	13214
Volume	1116691
Year High	417.86
Year Low	102.25
M A 50	282.9
M A 200	269.91

FCF Yield	-1.57%
Dividend Yield	0.00%
ROE	-2.63%
Debt / Equity	18.69%
Net Debt / EBIDTA	405.84%
Price To Book	2.98
Price Earnings Ratio	-189.16
Price To FCF	-63.77
Price To sales	9.65
EV / EBITDA	119.01

2. AeroVironment's Record Q2: A Strong Foundation for Future Growth

AeroVironment's second-quarter fiscal year 2026 financial performance was impressive, with revenue reaching a record $472.5 million, representing a 151% increase over the prior year, or 9% on a pro forma basis. The company's legacy AV organic growth was 21%, driven by strong demand for its Precision Strike and Counter-UAS products, particularly Switchblade 600 and Titan sales. Adjusted gross margins were 27%, impacted by operational inefficiencies from the Oracle Fusion ERP system upgrade and an unfavorable service product mix. Non-GAAP earnings per diluted share were $0.44, below estimates of $0.776. Adjusted EBITDA was $45 million, up from $25.9 million in the prior year.

Publication Date: Dec -20

                                    📋 Highlights
                                    Record Contract Awards::
                                                New contract awards hit $3.5B, driving Q2 bookings to $1.4B and revenue to $472.5M (+151% YoY).
Revenue Guidance Raised::
                                                FY2026 revenue now expected $1.95B–$2B, up from prior guidance, with 93% visibility to midpoint.
Major Program Wins::
                                                Secured $1B U.S. Army Long Range Reconnaissance and $874M international UAS IDIQ contract.
Production Expansion::
                                                New 100,000 sq ft Salt Lake City facility to support $500M+ production capacity, scaling to $2B in Switchblade sales by 2027.
Margin and Profitability Upgrades::
                                                Adjusted EBITDA rose to $45M (+74% YoY), with gross margins expected to reach high 30s by Q4.

                                

Contract Wins and Backlog

The company achieved significant contract wins, including the U.S. Army's Long Range Reconnaissance Program, worth approximately $1 billion, and an $874 million sole-sourced IDIQ contract for international sales of small UAS products. AeroVironment's funded backlog is $1.1 billion, with an additional $2.8 billion unfunded, providing strong visibility to its revenue guidance range. The company's backlog is expected to grow further with additional funded task orders in Q3 and Q4.

Operational Efficiencies and Guidance

AeroVironment is expanding its manufacturing capacity, including a new 100,000 square foot facility in Salt Lake City, which will allow for multiple Switchblade lines and provide additional capacity. The company is raising the lower end of its fiscal year 2026 revenue guidance to between $1.95 billion and $2 billion, with adjusted EBITDA between $300 million and $320 million. The guidance reflects a 15% growth over pro forma FY '25 results.

Valuation and Growth Prospects

AeroVironment's current valuation metrics, including a P/S Ratio of 11.22 and EV/EBITDA of -202.1, indicate a high growth expectation. Analysts estimate next year's revenue growth at 153.0%. With a strong backlog and expected growth in international demand, driven by favorable changes to missile technology control and UAS treatment, AeroVironment is well-positioned for future success. The company's investment in R&D and proactive CapEx strategy enable it to accelerate development and scale production ahead of demand.

3. NewsRoom

AeroVironment (AVAV) Stock Falls Amid Market Uptick: What Investors Need to Know

Feb -20

Source:

AI Takes Flight: Five Companies Advancing Defense and Aerospace Intelligence

Feb -20

Source: prnewswire.com

Why AeroVironment Stock Took Flight and Climbed 15% This Week

Feb -20

Source: fool.com

AeroVironment: Riding The Drone Boom And Laser Tech To New Heights

Feb -19

Source: seekingalpha.com

AV, Inc. to Present at Citizens Technology Conference

Feb -18

Source: businesswire.com

AeroVironment: 30% Selloff Creates A Buy Opportunity For The Drone Specialist (Rating Upgrade)

Feb -18

Source: seekingalpha.com

Why AeroVironment Stock Climbed Today

Feb -17

Source: fool.com

CAE or AVAV: Which Is the Better Value Stock Right Now?

Feb -17

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.12%)

6. Segments

Small Unmanned Aircraft Systems

Expected Growth: 15%

AeroVironment's Small Unmanned Aircraft Systems' 15% growth is driven by increasing adoption in military and commercial markets, rising demand for surveillance and reconnaissance capabilities, and growing need for efficient and cost-effective solutions. Additionally, advancements in drone technology, expanding use cases in agriculture, infrastructure inspection, and public safety, and strategic partnerships and contracts also contribute to the growth.

Tactical Missile Systems

Expected Growth: 10%

AeroVironment's Tactical Missile Systems growth is driven by increasing demand for unmanned aerial systems, rising adoption of loitering munitions, and growing need for precision strike capabilities. Additionally, the company's focus on innovation, expanding international sales, and strategic partnerships contribute to its 10% growth.

All Other

Expected Growth: 8%

AeroVironment's All Other segment growth is driven by increasing adoption of its electric vehicle charging solutions, expansion of its PosiCharge industrial electric vehicle charging business, and growing demand for its unmanned aerial systems (UAS) from international customers, resulting in an 8% growth rate.

Medium Unmanned Aircraft Systems

Expected Growth: 13%

AeroVironment's Medium Unmanned Aircraft Systems' 13% growth is driven by increasing adoption in military and commercial markets, advancements in autonomous technology, and rising demand for surveillance and reconnaissance capabilities. Government contracts, foreign military sales, and expansion into new geographies also contribute to growth.

7. Detailed Products

Raven

A small unmanned aerial vehicle (UAV) designed for military and commercial use, providing real-time video and photographic reconnaissance.

Puma

A small, portable, and rugged UAV designed for military and commercial use, providing real-time video and photographic reconnaissance.

Wasp

A small, lightweight, and portable UAV designed for military and commercial use, providing real-time video and photographic reconnaissance.

Quantix

A hybrid vertical takeoff and landing (VTOL) UAV designed for commercial use, providing real-time video and photographic reconnaissance.

EV Charging Solutions

A range of electric vehicle (EV) charging solutions designed for commercial and residential use, providing fast and efficient charging.

TurboCord

A portable and compact EV charging cable designed for Level 1 and Level 2 charging.

8. AeroVironment, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

AeroVironment, Inc. faces moderate threat from substitutes due to the presence of alternative solutions in the unmanned aircraft systems (UAS) market.

Bargaining Power Of Customers

AeroVironment, Inc. has a diverse customer base, including the US military and commercial customers, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

AeroVironment, Inc. relies on a few key suppliers for components and materials, which gives them some bargaining power, but the company's size and reputation help mitigate this risk.

Threat Of New Entrants

The UAS market is rapidly evolving, and new entrants with innovative technologies and business models pose a significant threat to AeroVironment, Inc.'s market share.

Intensity Of Rivalry

The UAS market is highly competitive, with several established players and new entrants vying for market share, leading to intense rivalry among competitors.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	22.81%
Debt Cost	6.12%
Equity Weight	77.19%
Equity Cost	6.12%
WACC	6.12%
Leverage	29.55%

11. Quality Control: AeroVironment, Inc. passed 4 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Spirit AeroSystems

A-Score: 5.0/10

Value: 9.6

Growth: 1.1

Quality: 5.2

Yield: 0.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

AeroVironment

A-Score: 5.0/10

Value: 6.9

Growth: 6.1

Quality: 4.8

Yield: 0.0

Momentum: 9.0

Volatility: 3.0

1-Year Total Return ->

Kratos Defense

A-Score: 4.5/10

Value: 2.4

Growth: 5.2

Quality: 5.9

Yield: 0.0

Momentum: 10.0

Volatility: 3.3

1-Year Total Return ->

Hexcel

A-Score: 4.3/10

Value: 1.6

Growth: 4.3

Quality: 4.3

Yield: 1.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

AAR

A-Score: 4.2/10

Value: 4.8

Growth: 4.8

Quality: 3.1

Yield: 0.0

Momentum: 7.5

Volatility: 5.3

1-Year Total Return ->

Leonardo DRS

A-Score: 4.1/10

Value: 2.3

Growth: 3.7

Quality: 6.2

Yield: 1.0

Momentum: 5.5

Volatility: 6.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

44.19%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.12%

AeroVironment, Inc. - US0080731088

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on AVAV

1.c. Company Highlights

Expensive

Strong Momentum

Lower Growth

Earnings Beats

Revenues Miss

Medium Volatility

Revenues Beats

Average Growth

Earnings Miss

Stable Momentum

Average Quality

Weak Momentum

Better Quality

Average Yield

2. AeroVironment's Record Q2: A Strong Foundation for Future Growth

Contract Wins and Backlog

Operational Efficiencies and Guidance

Valuation and Growth Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.12%)

6. Segments

Small Unmanned Aircraft Systems

Expected Growth: 15%

Tactical Missile Systems

Expected Growth: 10%

All Other

Expected Growth: 8%

Medium Unmanned Aircraft Systems

Expected Growth: 13%

7. Detailed Products

Raven

Puma

Wasp

Quantix

EV Charging Solutions

TurboCord

8. AeroVironment, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: AeroVironment, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

264.63$

Current Price

264.63$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA