Start here if you're new
what it is
AeroVironment builds small military drones and precision-strike missiles for governments.
how it gets paid
Last year AeroVironment made $821M in revenue (FY2025), with FY2026 guidance at $1.9-2.0B. Unmanned Aircraft Systems was the main engine at $0.54B, or 42% of sales.
what just happened
AeroVironment posted $275M in Q4 revenue, up 40% vs. prior year.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
10/100 earnings predictability — expect surprises
69.7x trailing p/e — you're paying up for this one
6.0% return on capital — nothing to write home about
xvary composite: 43/100 — below average
What they do
AeroVironment builds small military drones and precision-strike missiles for governments.
You are not buying a hobby drone shop. AeroVironment sells to the U.S. DOD and foreign militaries, and 52% of 2024 sales came from outside the U.S. That means your customer list is governments, so leaving is a buying-process fight, not a new app download.
How they make money
$821M
annual revenue
Unmanned Aircraft Systems
$0.54B
Tactical Missile Systems
$0.33B
BlueHalo systems
$0.22B
Contract services
$0.21B
The products that matter
loitering munition systems
Switchblade
inside an $821M company (guiding to $2B)
this is the product line most tied to the company narrative, but the page gives no segment revenue split, so you are judging its importance inside an $821M revenue base (guiding $2B) rather than from clean product disclosure.
doctrine bet
tactical reconnaissance drones
small unmanned aircraft systems
supports the $3B fy2027 goal
these systems are part of the reason analysts see $3B in fy2027 revenue, which is 50% above the current $821M level.
scale path
missile technologies
missile and targeting systems
22.3% gross margin backdrop
this part of the portfolio matters because a business trading at 69.7x earnings with only a 22.3% gross margin needs every program to carry its weight.
margin test
Key numbers
$3B
FY2027 sales
The published FY2027 sales estimate is $3B. That is the scale you need when you are worth about $12B.
22.3%
gross margin
Only 22.3% of revenue stayed after direct costs last quarter. The rest went to hardware, labor, and overhead.
69.7x
trailing p/e
You are paying 69.7 times trailing earnings. That leaves no room for another ugly quarter.
$279
target price
The 18-month target is $279. That is only 14% above $243.87.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 10 / 100
- long-term debt $727M (6% of capital)
- net profit margin 10.6% — keeps 11 cents of every dollar in revenue
- return on equity 7% — $0.07 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in AVAV 3 years ago → it's now worth $26,850.
The index would have given you $13,880.
source: institutional data · total return
What just happened
missed estimates
AeroVironment posted $275M in Q4 revenue, up 40% vs. prior year, with record bookings.
Revenue jumped 227% vs. prior year, but the quarter still carried heavy costs from the BlueHalo deal and choppy shipment timing. The U.S. government shutdown delayed funding and shipments.
$275M
revenue
$4.94
eps
22.3%
gross margin
the number that mattered
22.3% gross margin was the tell. Revenue rose fast, but direct costs still took 77.7 cents of each dollar.
-
aerovironment posted weaker-than-expected results in the fiscal second quarter, following its blockbuster acquisition of bluehalo. (year ends april 30th.) revenues rose to $473 million, up 151% as reported and 9% pro-forma, which was only slightly lower than our $500 million target.
-
the results were choppy, as the u.s. government shutdown delayed funding and shipments.however, the autonomous systems segment continued to show operating momentum in a strong demand backdrop.
-
the main blemish was margins, as the adjusted gross margin fell to 27%, down from 41% in the year before, primarily due to mix, early-stage programs, and go-live inefficiencies.we expect these issues to improve as the combined company furthers its integration and finds greater.
-
the rest of fiscal 2025 mostly depends on shipping out its backlog.shutdown-related delays have largely shifted revenues out, with a heavy second-half skew, particularly for the fiscal fourth quarter. we expect gross margins to be rebuilt in parallel, as the product mix improves with more fixed-price deliveries.
-
autonomous systems and counterdrone demand should only expand over the next few years.aerovironment is squarely positioned toward autonomous systems, loitering munitions, counteruas, and space/networking technologies; categories that are being emphasized more-broadly across u.s. defense modernization efforts.
source: company earnings report, 2026
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What could go wrong
the top risk is paying 69.7x earnings for a business with 10 / 100 predictability.
med
the multiple already assumes the fy2027 ramp
AVAV trades at 69.7x trailing earnings while targeting $3B revenue and $6.00 EPS by fy2027. That is a lot of future packed into today's price.
If revenue does not move cleanly from $821M toward $3B, the stock loses the math that supports a premium multiple.
med
the Pomerantz investigation adds a new overhang
A public notice 4 days ago said the firm is investigating whether AeroVironment and certain officers or directors engaged in securities fraud or other unlawful conduct.
We are not treating an investigation as guilt. We are treating it as a credibility tax until the noise clears.
med
the operating profile does not look premium yet
Gross margin is 22.3%, net margin is 10.6%, return on capital is 6.0%, and return on equity is 7%. Those are real-business numbers, not obvious category-winner numbers.
If margins and capital efficiency stay ordinary, the stock eventually gets priced more like a defense manufacturer and less like a strategic platform story.
The risk stack is simple: low predictability, active legal noise, and a valuation that needs the jump from $821M revenue to $3B to show up on schedule.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
the next quarter needs to restore confidence
with earnings predictability at 10 / 100, the next report matters more than usual. You want evidence the business is tracking toward $3B revenue and $6.00 EPS in fy2027.
metric
watch whether 22.3% gross margin starts to climb
a near-70x stock needs better economics than a standard manufacturer. Margin expansion is one of the few clean ways to justify the premium.
risk
follow the legal investigation for resolution, not headlines
an investigation is noise until it becomes something else. If it disappears, the stock can refocus on execution. If it grows, valuation usually does not wait around.
trend
institutional buying stayed positive even while the chart broke
359 buyers versus 186 sellers in 3q2025 says large holders kept leaning in. If that support fades while the business stays lumpy, the bull case loses an important backer.
Analyst rankings
earnings predictability
10 / 100
in human-speak, analysts should not be shocked if this company keeps delivering uneven quarters.
risk rank
3
middle-of-the-pack safety. not fragile, not a bunker stock.
price stability
10 / 100
the stock has not behaved like a stable compounder. it has behaved like a high-expectation theme name.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 359 buyers vs. 186 sellers in 3q2025. total institutional holdings: 31.6M shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$138
$420
$244
current price
$279
target midpoint · +14% from current · 3-5yr high: $400 (+65% · 13% ann'l return)
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