AeroVironment (AVAV): Evaluating Fair Value After Strong Three-Month Momentum

AeroVironment (AVAV) shares edged slightly higher with a 0.4% uptick at the last close. This capped off a mixed stretch for the month but still reflected strong gains over the past 3 months. Investors are watching for cues on whether those momentum trends will hold.

See our latest analysis for AeroVironment.

AeroVironment’s share price has had a wild ride lately, trimming back sharply over the past month but still maintaining impressive momentum for the year. The 33% share price return over the last 90 days and an annual total shareholder return of nearly 45% suggest investors are looking past short-term volatility in favor of ongoing growth potential.

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With AeroVironment’s stock soaring over 33% in three months but pulling back recently, the question remains: is the current price still a bargain, or has the market already baked in all of the company’s future growth?

Most Popular Narrative: 19.4% Undervalued

AeroVironment's fair value, according to the most widely followed narrative, stands well above the latest share price. With analysts raising future revenue and margin expectations, this debate centers on whether the company's expansion will drive a further rerating.

The company's strategic focus on developing modular, interoperable, and software-defined platforms, including the newly launched AV Halo open software ecosystem, directly aligns with the accelerating adoption of AI-powered autonomy and network-centric warfare. This enables future premium pricing, increased service revenues, and gross margin expansion as these high-value platforms are deployed at scale.

Read the complete narrative.

What bold forecasts are fueling this valuation? This narrative hinges on a potential leap in margins and blockbuster earnings growth, but the real financial assumptions are hidden beneath the surface. Eager to see which surprising projections underpin this price target? Click through for all the context and numbers behind the fair value estimate.

Result: Fair Value of $409 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sudden shifts in U.S. defense budgets or increasing competition in the drone industry could quickly change AeroVironment’s positive outlook.

Find out about the key risks to this AeroVironment narrative.

Another View: High Ratios Signal Valuation Risk

Taking a different angle, AeroVironment trades at a price-to-sales ratio of 15.1x. This is significantly higher than the US Aerospace & Defense industry average of 3x and is also well above its peers’ average of 6.6x. Even when compared to the estimated fair ratio of 5.8x, the current multiple appears expensive. Such a premium suggests that investors are expecting substantial growth ahead, but it also places greater pressure on the company to meet those expectations. Could this elevated ratio indicate untapped opportunity, or does it point to risks if expectations are not met?

Story Continues

See what the numbers say about this price — find out in our valuation breakdown.NasdaqGS:AVAV PS Ratio as at Nov 2025

Build Your Own AeroVironment Narrative

If you see the numbers differently or want to dig deeper, you can uncover your own insights and craft a unique view in just a few minutes. Do it your way

A great starting point for your AeroVironment research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include AVAV.

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