AVAV Stock Risk & Deep Value Analysis
AeroVironment Inc
Industrials • Aerospace & Defense
DVR Score
out of 10
What You Need to Know About AVAV Stock
We analyzed AeroVironment Inc using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran AVAV through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Aggressive. Here's what we found.
AVAV Risk Analysis & Red Flags
What Could Go Wrong
The company's worsening operating cash outflow of -$173.9M for 9M FY2026 is unsustainable. If this trend continues, it could necessitate significant future capital raises, severely diluting shareholders, or constrain investments needed for growth, leading to a substantial drop in stock price.
Risk Matrix
Overall
Aggressive
Financial
High
Market
Medium
Competitive
High
Execution
High
Regulatory
Low
Red Flags
- ⚠
Negative net margin of -13.93% (GAAP unprofitable) and widening operating cash outflow.
- ⚠
Pentagon's competitive bidding for SCAR program (BlueHalo's segment) directly threatens a key growth driver.
- ⚠
Significant increase in short interest as of April 17, 2026.
- ⚠
Q3 FY2026 earnings miss for both revenue and non-GAAP EPS.
Upcoming Risk Events
- 📅
Q4 FY2026 earnings miss on revenue or EPS, or weak FY2027 guidance
- 📅
Loss of market share in BlueHalo's SCAR program due to competitive bidding
- 📅
Further deterioration of operating cash flow or increased capital expenditure needs
When to Reconsider
- 🚪
Exit if operating cash flow remains negative and worsens for two consecutive quarters.
- 🚪
Sell if competitive wins in the SCAR program are awarded to rivals, significantly impacting BlueHalo's revenue projections.
- 🚪
Exit if FY2027 EPS guidance is materially lowered or future revenue growth decelerates sharply below analyst consensus.
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What Does AeroVironment Inc (AVAV) Do?
Market Cap
$10.25B
Sector
Industrials
Industry
Aerospace & Defense
Employees
1,456
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 in two segments, Autonomous Systems; and Space, Cyber and Directed Energy. The company provides uncrewed aircraft systems (UAS), which include small and medium UAS, and kinesis command and control software; and counter-UAS and precision strike, a loitering munitions solution that deliver actionable intelligence and precision firepower modern warfighters, including precision strike, radio frequency and kinetic C-UAS, and electronic warfare systems. It also offers autonomy, AI, and platform technologies; unmanned maritime; uncrewed ground systems; and high-altitude pseudo-satellites. The company provides digital beamforming technology, a multi-band/beam software defined antenna tile that allows simultaneous communication with multiple satellites; laser communications, a data transmission systems for space operations; space-qualified hardware for line of sight stabilization and control electronics in low, medium, and geostationary earth orbit, as well as cislunar orbits; phased array antenna technology to supports hypersonic telemetry and tracking, and other missile testing; and directed energy solution. It also offers cyber solution for national security and defense operations; and HaloCortex OSINT, an AI-powered OSINT analysis platform to provide insights and solve department of defense and commercial challenges. AeroVironment, Inc. was incorporated in 1971 and is headquartered in Arlington, Virginia.
Visit AeroVironment Inc WebsiteInvestment Thesis
AeroVironment is positioned to capitalize on growing global defense spending and the increasing demand for autonomous and advanced defense systems. The BlueHalo acquisition significantly expanded its market reach into critical areas like space, cyber, and directed energy. While facing near-term profitability and competitive headwinds, its strong balance sheet, innovation in areas like LOCUST, and anticipated FY2027 EPS growth provide a foundation for long-term value creation.
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AVAV Price Targets & Strategy
12-Month Target
$350.00
Bull Case
$415.00
Bear Case
$180.00
Valuation Basis
Based on 93.8x forward P/E applied to $3.73 est. FY27 EPS = $350.00
Entry Strategy
Consider dollar-cost averaging on dips towards $190-$200, which has shown recent support. Monitor for sustained move above 50-day SMA ($205).
Exit Strategy
Take 50% profit at $350-$370; re-evaluate if negative cash flow persists for more than two consecutive quarters. Stop-loss at $180.
Portfolio Allocation
3-5% for moderate risk tolerance
Price Targets & Strategy
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Is AVAV Financially Healthy?
Valuation
P/E Ratio
235.10
Forward P/E
85.07
EV/EBITDA
76.42
PEG Ratio
0.14
Price/Book
12.07
Price/Sales
23.03
Profitability
Gross Margin
24.74%
Operating Margin
-16.44%
Net Margin
-13.93%
Return on Equity
-6.41%
Revenue Growth
116.86%
EPS
$-4.34
Balance Sheet
Current Ratio
3.52
Quick Ratio
2.52
Debt/Equity
0.03
Other
Beta (Volatility)
1.44
Does AVAV Have a Competitive Moat?
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Moat Trend
Stable
Moat Sources
3 Identified
AeroVironment's moat is durable due to specialized IP and deep integration with U.S. government defense systems, creating high switching costs. Its established position in critical defense technologies gives it an advantage in securing large, long-term contracts. However, the rapidly evolving nature of defense tech and increased competitive bidding (like the SCAR program) mean constant innovation is required to prevent erosion.
Moat Erosion Risks
- •Increased competitive pressure from emerging defense tech companies and larger contractors.
- •Technological obsolescence if R&D does not keep pace with market demands.
- •Potential shifts in government procurement priorities or budget constraints.
AVAV Competitive Moat Analysis
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AVAV Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral, with growing investor attention but also increased short interest indicating skepticism.
Institutional Sentiment
Positive, with institutional buying from Peregrine Investment Management and Vanguard Group Inc. Analyst consensus is predominantly 'Buy' despite some target reductions.
Insider Activity (Form 4)
Sean T. Woodward appointed Executive Vice President and CFO, effective May 1, 2026.
Options Flow
Normal options activity, with no specific unusual activity reported in the provided research.
Earnings Intelligence
Next Earnings
Estimated May/June 2026
Surprise Probability
Medium
Historical Earnings Pattern
Q3 FY2026 earnings resulted in misses, though YoY revenue growth was strong. Stock price reaction highly sensitive to competitive news (e.g., SCAR program caused >17% drop).
Key Metrics to Watch
Competitive Position
Top Competitor
KTOS
Market Share Trend
Gaining market share through strategic acquisitions like BlueHalo, but faces new competitive threats in key segments (e.g., SCAR program).
Valuation vs Peers
Trading at a significant premium on a forward P/E basis compared to many defense peers (due to higher growth projections), but with negative GAAP P/E reflecting unprofitability. PEG ratio of 3.46 is elevated.
Competitive Advantages
- •Strong established relationships with U.S. government defense agencies
- •Proprietary technology and intellectual property in unmanned systems and directed energy
- •Diverse portfolio across defense UAS, robotics, space, and cyber solutions
Market Intelligence
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What Could Drive AVAV Stock Higher?
Near-Term (0-6 months)
- •Q4 FY2026 Earnings (Estimated May/June 2026)
- •BlueHalo segment successfully navigating competitive bidding for SCAR program
- •Integration success and synergy realization from BlueHalo acquisition
Medium-Term (6-18 months)
- •New large government contract awards in autonomous systems or directed energy
- •Expansion of LOCUST laser weapon system deployments
- •Positive cash flow generation momentum into FY2027
Long-Term (18+ months)
- •Establishment as a dominant player in next-gen autonomous defense solutions
- •Disruption of traditional defense contracting with agile, high-tech solutions
- •Successful monetization of advanced R&D in new defense verticals
Catalysts & Growth Drivers
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What's the Bull Case for AVAV?
- ✓
Acceleration in organic revenue growth beyond acquisition-driven figures.
- ✓
Consistent improvement in GAAP profitability and positive free cash flow generation.
- ✓
Significant new contract wins for BlueHalo segment amidst competitive pressures.
Bull Case Analysis
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Competing with AVAV
See how AeroVironment Inc compares to related companies
| Company | Market Cap | DVR Score | P/E | Revenue | Profit Margin | Rev Growth | |
|---|---|---|---|---|---|---|---|
AeroVironment Inc AVAV | $10.3B | 4.6 | 235.1 | $820.6M | -13.9% | 116.9% | |
Caterpillar Inc CAT | — | 0.1 | — | — | — | — | Compare → |
General Electric Co GE | $306.2B | 0.1 | 35.9 | $45.9B | 20.0% | 18.0% | Compare → |
Honeywell International Inc. HON | — | 1.5 | — | — | — | — | Compare → |
Kratos Defense and Security Solutions Inc KTOS | $14.5B | 5.2 | 592.1 | $1.4B | 1.6% | 21.9% | Compare → |
United Parcel Service Inc UPS | $81.3B | 0.1 | 14.3 | — | — | — | Compare → |
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How AeroVironment Inc Makes Money
AeroVironment is a defense technology company that designs, develops, produces, and supports unmanned aerial systems (UAS), robotics, and related advanced technology solutions primarily for government agencies, including the U.S. Department of Defense. It recently expanded its offerings significantly through the acquisition of BlueHalo, adding capabilities in space technology, cyber operations, and directed energy. The company essentially sells sophisticated, high-tech tools and systems, often via long-term contracts, that enable military and security forces to conduct surveillance, reconnaissance, and combat operations more effectively.
Read Full Business Model BreakdownFAQ
What is the DVR Score for AeroVironment Inc (AVAV)?
As of April 24, 2026, AeroVironment Inc has a DVR Score of 4.6 out of 10, placing it in the "Proceed with Caution" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of AeroVironment Inc?
AeroVironment Inc's market capitalization is approximately $10.3B. The company operates in the Industrials sector within the Aerospace & Defense industry.
What ticker symbol does AeroVironment Inc use?
AVAV is the ticker symbol for AeroVironment Inc. The company trades on the NMS.
What is the risk level for AVAV stock?
Our analysis rates AeroVironment Inc's overall risk as Aggressive. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of AVAV?
AeroVironment Inc currently has a price-to-earnings (P/E) ratio of 235.1. This is above the market average, suggesting the stock may be priced for high growth expectations.
Is AeroVironment Inc's revenue growing?
AeroVironment Inc has reported revenue growth of 116.9%. The company is showing strong top-line momentum.
Is AVAV stock profitable?
AeroVironment Inc has a profit margin of -13.9%. The company is currently unprofitable.
How often is the AVAV DVR analysis updated?
Our AI-powered analysis of AeroVironment Inc is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on April 24, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for AVAV (AeroVironment Inc) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.