AeroVironment (AVAV): exceptional growth and billion-dollar potential

📊 Key financial results

• Revenues $AVAV for the latest quarter reached $275.1 million, a 40% year-on-year growth and significantly beating estimates (expectations were for approximately $241.5 million).
• Earnings per share (EPS) for Q4 were $1.61, more than triple last year's $0.43.
• Full-year revenue was $820.6 million, up 14% from a year earlier.
• Backlog rose to $726.6 million from last year's $400.2 million - nearly double.

📈 Outlook for 2026

• Revenue is expected to be in the range of USD 1.9 to 2 billion.
• EBITDA $AVAV (operating profit before depreciation and amortization) is expected to reach $300-320 million.
• Wall Street analysts are a bit more cautious - their estimates call for revenues of USD 2 billion, but EBITDA lower, around USD 287 million.
• A significant factor in the outlook is the planned merger with BlueHalo, which will expand $AVAV's capabilities in space and intelligence technologies.

1. Exceptional profit and revenue growth
   
2. EPS grew more than 3x, reflecting the company's high efficiency and growing demand for its products.
3. The 40% revenue growth in Q4 indicates that products like loitering munitions and unmanned systems are in high demand.
4. Geographical diversification
5. The decline in revenue from Ukraine (from 38% to 18%, and expected to be below 5% in 2026) is offset by growth in other regions - notably the Middle East, Indo-Pacific and Europe.
6. Innovation and expansion
7. $AVAV is investing in new technologies such as autonomous systems, cruise missiles and space technologies.
8. The planned merger with BlueHalo could take the company to a new level technologically and market-wise.

SWOT summary (verbal)

STRENGTHS

• Technological superiority in drones and loitering munitions
• Rapid revenue and profit growth
• Strong orders and global market diversification
  

WEAKNESSES

• High dependence on government defense budgets
• Potential risks associated with the integration of the BlueHalo acquisition

OPPORTUNITIES

• Rising defence spending in many countries
• Entry into the civilian security sector
• Expansion into space and intelligence technologies
  

THREATS

• Geopolitical fluctuations and government procurement delays
• Regulation of military exports
• Increasing competition (e.g. Lockheed, Kratos, Palantir)

💵 Valuation and current share price

• Current share price: approximately $234.94
• Share price appreciation of more than 21% this year
• Forward P/E (price/earnings) is around 40x - high, but consistent with growth potential
• The company's market capitalization is approximately $6.5 billion

🧭 Who is AVAV suitable for?

• ✅ For growth-oriented investors looking for companies with high potential and a technological edge
• ✅ For thematic investors focused on defense, autonomy, drones and AI
• ✅ For long-term investors who expect to grow over the next 3-5 years
• ❌ Not suitable for dividend investors - AeroVironment does not pay a dividend
• ❌ Not suitable for conservative value investors as the stock is more expensive from a traditional valuation perspective