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AVAV Slides 28.4% in 3 Months: Buy, Hold or Take Profits?
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Key Takeaways
AeroVironment fell 28.4% in 3 months, far worse than the aerospace-defense equipment industry's 0.1% dip.
AeroVironment reports a $1.1B funded backlog and $2.1B YTD bookings, with $4.5B in awards in 9 months.
AeroVironment trades at 3.83X forward P/S vs 11.98X industry, with lower debt and a 5.51 current ratio.
AeroVironment, Inc. (AVAV - Free Report) shares have fallen 28.4% over the past three months, underperforming the Zacks Aerospace-Defense Equipment industry’s decline of 0.1%. However, the company is gaining from strong defense spending trends and a robust backlog position. Strategic acquisitions are further enhancing AeroVironment’s manufacturing, propulsion and unmanned systems capabilities, supporting stronger long-term growth visibility.
Image Source: Zacks Investment Research
In contrast, some stocks from the same industry, such as Teledyne Technologies Inc. (TDY - Free Report) and TransDigm Group Inc. (TDG - Free Report) , have also underperformed the industry. Over the past three months, shares of TDY and TDG have declined 3.9% and 6.2%, respectively.
With AVAV shares falling over the past three months, investors may be reassessing the stock’s outlook. Let’s examine the key factors shaping its performance and evaluate its investment prospects.
Tailwinds Supporting AVAV’s Growth
AeroVironment continues to benefit from rising U.S. and allied defense spending focused on uncrewed systems, loitering munitions and advanced mission technologies. The company generates a significant portion of revenues from government and defense contracts, supported by flexible structures such as IDIQ and Other Transaction Authority agreements that help accelerate deployment timelines and strengthen long-term customer relationships. Its Precision Strike & Defensive Systems business remains a major growth driver, aided by the increasing demand for Switchblade systems and related battlefield technologies.
AeroVironment exited third-quarter fiscal 2026 with a funded backlog of $1.1 billion, while fiscal year-to-date bookings reached $2.1 billion, reflecting strong order momentum. The company also highlighted total awards of $4.5 billion during the first nine months of fiscal 2026, providing solid revenue visibility heading into fiscal 2027. The company’s strong backlog profile, combined with a healthy book-to-bill ratio, supports continued demand visibility across its defense and autonomous systems portfolio.
AeroVironment is expanding its aerospace and manufacturing capabilities through strategic acquisitions. In March 2026, the company acquired Empirical Systems Aerospace, Inc. (ESAero), a producer of unmanned aircraft systems and advanced air mobility platforms. ESAero’s expertise in electric and hybrid propulsion, rapid prototyping and advanced manufacturing is expected to strengthen AeroVironment’s drone and loitering munition capabilities while supporting long-term growth across next-generation defense technologies.
Challenges Ahead of AVAV Stock
AeroVironment remains heavily dependent on contracts from U.S. defense agencies, making its revenues vulnerable to shifts in government spending priorities, contract delays or reductions in defense budgets. Since many government contracts can be modified or terminated at the customer’s discretion, the company faces limited revenue visibility and potential cash flow pressure.
The company also operates in a rapidly evolving and intensely competitive defense technology market. Any inability to develop innovative solutions or successfully commercialize products could weaken its competitive position against larger and better-capitalized peers. Continued investments in research and development may weigh on margins, while returns on such spending remain uncertain.
Earnings Estimates for AVAV Stock
The Zacks Consensus Estimate for AVAV’s fiscal 2026 earnings per share (EPS) indicates a decrease of 6.67% over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Teledyne Technologies’ 2026 EPS calls for a rise of 0.46% in the past 60 days. The estimate for TransDigm Group’s fiscal 2026 EPS implies an increase of 0.13% over the same period.
Debt Position of AVAV
Currently, AeroVironment’s total debt to capital is 14.56%, much better than the industry’s average of 43.21%. It indicates that the company can run its business efficiently with much lower debt levels than its industry peers.
Image Source: Zacks Investment Research
AVAV’s Liquidity Position
AVAV has a current ratio of 5.51 compared with its industry’s average of 2.17. 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, Teledyne Technologies and TransDigm Group, also maintain current ratios above one. TDY has a current ratio of 1.76, while TDG holds 3.52.
AVAV Stock Trades at a Discount
AeroVironment is currently trading at 3.83X, a discount compared to its industry’s 11.98X on a forward 12-month Price/Sales basis.
Image Source: Zacks Investment Research
What Should Investors Do Now?
AeroVironment continues to benefit from rising global defense demand, supported by strong momentum in unmanned systems, loitering munitions and autonomous technologies. Its expanding backlog and strategic acquisitions are expected to strengthen manufacturing capabilities and support long-term revenue visibility.
Given AVAV’s recent share-price weakness and exposure to government spending risks, new investors may prefer waiting for a better entry point. Investors who already own this Zacks Rank #3 (Hold) stock may consider staying invested, supported by its discounted valuation, lower debt levels and healthy liquidity. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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AVAV Slides 28.4% in 3 Months: Buy, Hold or Take Profits?
Key Takeaways
AeroVironment, Inc. (AVAV - Free Report) shares have fallen 28.4% over the past three months, underperforming the Zacks Aerospace-Defense Equipment industry’s decline of 0.1%. However, the company is gaining from strong defense spending trends and a robust backlog position. Strategic acquisitions are further enhancing AeroVironment’s manufacturing, propulsion and unmanned systems capabilities, supporting stronger long-term growth visibility.
Image Source: Zacks Investment Research
In contrast, some stocks from the same industry, such as Teledyne Technologies Inc. (TDY - Free Report) and TransDigm Group Inc. (TDG - Free Report) , have also underperformed the industry. Over the past three months, shares of TDY and TDG have declined 3.9% and 6.2%, respectively.
With AVAV shares falling over the past three months, investors may be reassessing the stock’s outlook. Let’s examine the key factors shaping its performance and evaluate its investment prospects.
Tailwinds Supporting AVAV’s Growth
AeroVironment continues to benefit from rising U.S. and allied defense spending focused on uncrewed systems, loitering munitions and advanced mission technologies. The company generates a significant portion of revenues from government and defense contracts, supported by flexible structures such as IDIQ and Other Transaction Authority agreements that help accelerate deployment timelines and strengthen long-term customer relationships. Its Precision Strike & Defensive Systems business remains a major growth driver, aided by the increasing demand for Switchblade systems and related battlefield technologies.
AeroVironment exited third-quarter fiscal 2026 with a funded backlog of $1.1 billion, while fiscal year-to-date bookings reached $2.1 billion, reflecting strong order momentum. The company also highlighted total awards of $4.5 billion during the first nine months of fiscal 2026, providing solid revenue visibility heading into fiscal 2027. The company’s strong backlog profile, combined with a healthy book-to-bill ratio, supports continued demand visibility across its defense and autonomous systems portfolio.
AeroVironment is expanding its aerospace and manufacturing capabilities through strategic acquisitions. In March 2026, the company acquired Empirical Systems Aerospace, Inc. (ESAero), a producer of unmanned aircraft systems and advanced air mobility platforms. ESAero’s expertise in electric and hybrid propulsion, rapid prototyping and advanced manufacturing is expected to strengthen AeroVironment’s drone and loitering munition capabilities while supporting long-term growth across next-generation defense technologies.
Challenges Ahead of AVAV Stock
AeroVironment remains heavily dependent on contracts from U.S. defense agencies, making its revenues vulnerable to shifts in government spending priorities, contract delays or reductions in defense budgets. Since many government contracts can be modified or terminated at the customer’s discretion, the company faces limited revenue visibility and potential cash flow pressure.
The company also operates in a rapidly evolving and intensely competitive defense technology market. Any inability to develop innovative solutions or successfully commercialize products could weaken its competitive position against larger and better-capitalized peers.
Continued investments in research and development may weigh on margins, while returns on such spending remain uncertain.
Earnings Estimates for AVAV Stock
The Zacks Consensus Estimate for AVAV’s fiscal 2026 earnings per share (EPS) indicates a decrease of 6.67% over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Teledyne Technologies’ 2026 EPS calls for a rise of 0.46% in the past 60 days. The estimate for TransDigm Group’s fiscal 2026 EPS implies an increase of 0.13% over the same period.
Debt Position of AVAV
Currently, AeroVironment’s total debt to capital is 14.56%, much better than the industry’s average of 43.21%. It indicates that the company can run its business efficiently with much lower debt levels than its industry peers.
Image Source: Zacks Investment Research
AVAV’s Liquidity Position
AVAV has a current ratio of 5.51 compared with its industry’s average of 2.17. 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, Teledyne Technologies and TransDigm Group, also maintain current ratios above one. TDY has a current ratio of 1.76, while TDG holds 3.52.
AVAV Stock Trades at a Discount
AeroVironment is currently trading at 3.83X, a discount compared to its industry’s 11.98X on a forward 12-month Price/Sales basis.
Image Source: Zacks Investment Research
What Should Investors Do Now?
AeroVironment continues to benefit from rising global defense demand, supported by strong momentum in unmanned systems, loitering munitions and autonomous technologies. Its expanding backlog and strategic acquisitions are expected to strengthen manufacturing capabilities and support long-term revenue visibility.
Given AVAV’s recent share-price weakness and exposure to government spending risks, new investors may prefer waiting for a better entry point. Investors who already own this Zacks Rank #3 (Hold) stock may consider staying invested, supported by its discounted valuation, lower debt levels and healthy liquidity. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.