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AVAV Stock Declines 17.2% in 3 Months: What's Next for Investors?
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Key Takeaways
AeroVironment shares fell 17.2% in three months, lagging the industry's 4.9% gain.
AVAV faces labor shortages, supply constraints and reliance on uncertain government contracts.
AeroVironment acquired ESA for $200M to boost capabilities, but trades at a premium valuation.
AeroVironment, Inc. (AVAV - Free Report) shares have fallen 17.2% over the past three months, underperforming the Zacks Aerospace-Defense Equipment industry’s rise of 4.2%. The company’s supply chain constraints, shortage of skilled labor and potential delays in contract awards or cancellations could negatively impact its financial performance and may limit its ability to capture greater market opportunities.
Image Source: Zacks Investment Research
In contrast, some other stocks, such as Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) and Leonardo DRS, Inc. (DRS - Free Report) , have outperformed the industry. In the past three months, shares of KTOS and DRS have risen 13.8% and 30.8%, respectively.
With AVAV’s shares declining over the past three months, investors may have mixed views. Let's examine the factors and assess the stock's investment prospects to make an informed decision.
Challenges Faced by AVAV
AeroVironment operates in a challenging environment that may affect its execution and overall financial performance. Ongoing labor shortages across skilled manufacturing and engineering roles could limit workforce availability. This may slow production timelines, increase operating costs and create difficulties in meeting growing demand for its unmanned systems.
Supply-chain constraints are also creating pressure on operations. Limited availability of specialized components and electronic parts can extend procurement timelines and raise input costs. These issues may disrupt production schedules and make it harder for the company to scale output efficiently as order volumes increase.
AeroVironment also faces risks related to its heavy reliance on government contracts and funding cycles. A significant portion of its revenues depends on contracts from U.S. and allied government agencies, which can be unpredictable in timing, size and renewal. Delays in contract awards, cancellations or changes in government budgets and policies may impact revenue visibility and cash flows.
Tailwind Supporting AVAV
AeroVironment is strengthening its defense capabilities through strategic acquisitions and technology expansion. On March 16, 2026, the company acquired Empirical Systems Aerospace, Inc. for nearly $200 million, adding advanced engineering, rapid prototyping and manufacturing capabilities. This acquisition enhances AeroVironment’s ability to scale unmanned aircraft systems and accelerate the transition from design to full-scale production, supporting evolving defense requirements.
Earnings Estimates for AVAV Stock
The Zacks Consensus Estimate for AVAV’s fiscal 2026 earnings per share (EPS) indicates a decrease of 10.69% over the past 60 days. Its long-term (three to five years) earnings growth rate is 19.52%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Kratos Defense’s 2026 EPS calls for a rise of 8.5% in the past 60 days. The estimate for Leonardo DRS’ 2026 EPS indicates an increase of 0.8% over the same period.
AVAV’s Earnings Surprise History
AeroVironment beat on earnings in one of the trailing four quarters and missed in the remaining three, delivering a negative average surprise of 12.05%.
Image Source: Zacks Investment Research
Liquidity Position of AVAV
AVAV has a current ratio of 5.51, compared to its industry’s average of 2.25. The ratio, being more than one, indicates that AVAV possesses sufficient capital to pay off its short-term debt obligations.
Image Source: Zacks Investment Research
Its industry peers, Kratos Defense and Leonardo DRS, also maintain current ratios above one. KTOS has a current ratio of 4.06, while DRS holds 1.89.
AVAV Stock Trades at a Premium
AeroVironment is currently trading at 51.31X, a premium compared to its industry’s 45.77X on a forward 12-month P/E basis.
Image Source: Zacks Investment Research
What Should an Investor Do?
Despite AeroVironment’s efforts to strengthen its defense capabilities through acquisitions and technology expansion, along with a solid liquidity position, its near-term outlook appears less attractive. The stock has underperformed the industry in recent months, while peers have delivered strong gains. At the same time, AVAV is trading at a premium valuation relative to the industry. With key operational risks persisting, investors should avoid AeroVironment stock at current levels.
AVAV currently carries a Zacks Rank #5 (Strong Sell).
View the Zacks #1 Rank List
Image: Bigstock
AVAV Stock Declines 17.2% in 3 Months: What's Next for Investors?
Key Takeaways
AeroVironment, Inc. (AVAV - Free Report) shares have fallen 17.2% over the past three months, underperforming the Zacks Aerospace-Defense Equipment industry’s rise of 4.2%. The company’s supply chain constraints, shortage of skilled labor and potential delays in contract awards or cancellations could negatively impact its financial performance and may limit its ability to capture greater market opportunities.
Image Source: Zacks Investment Research
In contrast, some other stocks, such as Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) and Leonardo DRS, Inc. (DRS - Free Report) , have outperformed the industry. In the past three months, shares of KTOS and DRS have risen 13.8% and 30.8%, respectively.
With AVAV’s shares declining over the past three months, investors may have mixed views. Let's examine the factors and assess the stock's investment prospects to make an informed decision.
Challenges Faced by AVAV
AeroVironment operates in a challenging environment that may affect its execution and overall financial performance. Ongoing labor shortages across skilled manufacturing and engineering roles could limit workforce availability. This may slow production timelines, increase operating costs and create difficulties in meeting growing demand for its unmanned systems.
Supply-chain constraints are also creating pressure on operations. Limited availability of specialized components and electronic parts can extend procurement timelines and raise input costs. These issues may disrupt production schedules and make it harder for the company to scale output efficiently as order volumes increase.
AeroVironment also faces risks related to its heavy reliance on government contracts and funding cycles. A significant portion of its revenues depends on contracts from U.S. and allied government agencies, which can be unpredictable in timing, size and renewal. Delays in contract awards, cancellations or changes in government budgets and policies may impact revenue visibility and cash flows.
Tailwind Supporting AVAV
AeroVironment is strengthening its defense capabilities through strategic acquisitions and technology expansion. On March 16, 2026, the company acquired Empirical Systems Aerospace, Inc. for nearly $200 million, adding advanced engineering, rapid prototyping and manufacturing capabilities. This acquisition enhances AeroVironment’s ability to scale unmanned aircraft systems and accelerate the transition from design to full-scale production, supporting evolving defense requirements.
Earnings Estimates for AVAV Stock
The Zacks Consensus Estimate for AVAV’s fiscal 2026 earnings per share (EPS) indicates a decrease of 10.69% over the past 60 days. Its long-term (three to five years) earnings growth rate is 19.52%.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Kratos Defense’s 2026 EPS calls for a rise of 8.5% in the past 60 days. The estimate for Leonardo DRS’ 2026 EPS indicates an increase of 0.8% over the same period.
AVAV’s Earnings Surprise History
AeroVironment beat on earnings in one of the trailing four quarters and missed in the remaining three, delivering a negative average surprise of 12.05%.
Image Source: Zacks Investment Research
Liquidity Position of AVAV
AVAV has a current ratio of 5.51, compared to its industry’s average of 2.25. The ratio, being more than one, indicates that AVAV possesses sufficient capital to pay off its short-term debt obligations.
Image Source: Zacks Investment Research
Its industry peers, Kratos Defense and Leonardo DRS, also maintain current ratios above one. KTOS has a current ratio of 4.06, while DRS holds 1.89.
AVAV Stock Trades at a Premium
AeroVironment is currently trading at 51.31X, a premium compared to its industry’s 45.77X on a forward 12-month P/E basis.
Image Source: Zacks Investment Research
What Should an Investor Do?
Despite AeroVironment’s efforts to strengthen its defense capabilities through acquisitions and technology expansion, along with a solid liquidity position, its near-term outlook appears less attractive. The stock has underperformed the industry in recent months, while peers have delivered strong gains. At the same time, AVAV is trading at a premium valuation relative to the industry. With key operational risks persisting, investors should avoid AeroVironment stock at current levels.
AVAV currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.