AEROVIRONMENT, INC. (AVAV): what the price requires

At today's price, AEROVIRONMENT, INC. (AVAV) is priced for today's economics sustained for ~10.6 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/AVAV

Headline

FieldValue
TickerAVAV
CompanyAEROVIRONMENT, INC.
Current price$141.29/sh
CompositionUxS 47% / LMS 43% / MW 11%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed6.8%
Operating margin (mid-cycle)10.0%
Margin compression implied-3.2pp
Trailing margin (depressed year)-24.7%
Must persist for10.6y
Multiple paid50x mid-cycle operating income

The operating-margin requirement is derived from the framework's value band at year 5, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9.6% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.1 years.

How unusual the bet is: elevated

ReferenceValue
vs own history+0.26σ
sustained it ~10 years at this level14%
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.74x2expensive
Earnings—0—
Relative2.18x3expensive
Growth1.46x2expensive

Families that call it expensive: Asset, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=7)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noNegative/zero FCF — equity value floored at $0
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$64.752.18xyesP/S fallback (negative EPS): Sector P/S 2.0x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$85.891.65xyesBook value floor: BV/sh $85.89, ROE negative
Two-Stage Excess ReturnAsset$77.301.83xyesBook value with convergence: BV/sh $85.89, ROE converges to ke
Discounted Future Market CapGrowth$118.871.19xyesRev $1.6B, growth 30% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.4x / 5.2x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth$81.751.73xyesMargin ramp: -14% → 12% over 7yr, rev growth 30% (input: historical growth; tapered)
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$17.548.06xyesEBITDA $0.10B × sector EV/EBITDA 14.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$64.752.18xyesRevenue $1.61B × sector P/S 2.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$115.2m
Net debt / NOPAT (after-tax)0.97x
Net debt / operating income (pre-tax)0.76x
Share count CAGR (dilution)18.9%
Burning cashyes

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 10.0%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

At $169.57 the price pays roughly 60x mid-cycle operating income, a figure that only resolves if company-wide operating growth holds near its self-funding ceiling for about twelve years. Only about one in seven comparable fast-growers has sustained that pace for a decade.

The near-term growth rate is not the stretch. AeroVironment has recently delivered it. The stretch is duration: the price needs that rate to persist far longer than the historical base rate supports, on a balance sheet that just absorbed the $4.1B BlueHalo acquisition and now carries $747.5M of gross debt.

No valuation family reaches the price. Asset, peer, and forward-growth frames all land below it, with the book-value floor near $86 and the relative-value mark near $65. The price is a bet beyond what any standard frame supports, and the SCAR program reopening to competitive bidding is the first test of whether that bet still holds.

Bull Case

Start with the loudest fear. The stock fell more than 17% when the Pentagon opened its SCAR phased-array antenna program to competitive bidding, a direct hit to the directed-energy and space-communications business AeroVironment bought through BlueHalo. The bear reads that as the first crack in a $4.1B acquisition thesis. The question is whether the operating data backs that fear or undercuts it.

The data leans against the panic. Q3 fiscal 2026 revenue came in at $408.0 million, with bookings of $2.1 billion and a record funded backlog of $1.1 billion. That backlog is the part the SCAR headline does not touch: it is contracted work already on the books. The company also reorganized into two reportable segments effective May 1, 2025, Autonomous Systems and Space, Cyber and Directed Energy, and the FY2025 10-K describes its uncrewed-aircraft family as the platform set it intends to extend into adjacent markets. The recent $186 million U.S. Army delivery order for Switchblade 600 Block 2 and 300 Block 20 loitering munitions shows the legacy robotics franchise still converting demand into orders even as attention shifts to the BlueHalo integration.

The through-the-cycle economics are stronger than the trailing print suggests. Reported results are depressed by acquisition accounting and integration cost, including a goodwill impairment that ran through the period, so the trough quarter understates the franchise. On the company's own mid-cycle margins the implied near-term growth rate is within what it has recently delivered, which is why the bull frames AeroVironment as a robotics specialist scaling into a defense prime rather than a stretched momentum name. If the BlueHalo services business integrates without bleeding the high margins of the legacy platforms, the franchise earns its way toward the price rather than having to grow into it on hope alone.

Bear Case

Begin with the balance sheet, because that is where the BlueHalo deal left a mark the price tag does not show. The company now carries $747.5 million of gross debt against $587.1 million of liquid assets, a net debt position of roughly $160 million, and trailing operating income that is negative once the cycle and the deal accounting run through it. The FY2025 10-K shows income from operations swinging to a $178.7 million loss line and diluted EPS of negative $7.04 in the affected period, with a goodwill impairment of $18.4 million on top. A company funding a twelve-year growth bet from a balance sheet that just turned net-debt and is burning at the operating line has less margin for a single integration stumble than the price assumes.

The price itself is the second problem. No valuation family reaches it. The book-value floor lands near $86, the two-stage excess-return mark near $77, and the sector price-to-sales relative mark near $65, all far below $169.57 (June 27, 2026). The forward-growth frame, which is the most generous, still sits below the price. When asset value, peer multiples, and forward growth all land under the quote, the price is not leaning on one demanding methodology, it is beyond all of them at once.

Then there is duration risk made concrete. The SCAR competitive-bidding decision shows how quickly a single program can re-rate the BlueHalo segment the acquisition was built around, and the consensus EPS estimate was cut by 11.3% over thirty days as analysts marked that down. The priced-in assumption needs growth held near the self-funding ceiling for about twelve years; history says only about 14% of comparable fast-growers sustained that for ten. Share count has compounded at roughly 19% a year, so even successful growth is being divided across a wider base. The bet is not that the business is bad. It is that the price has already paid for a decade-plus of flawless execution that the base rate, the balance sheet, and the first competitive test all argue against.

Valuation

Inverting the $169.57 price gives the cleanest read. At that level the market pays about 60x company-wide mid-cycle operating income, which under a 9.6% cost of capital and the 25% self-funding growth ceiling implies operating growth sustained for roughly twelve years. Each one-point change in the assumed growth rate moves that implied horizon by about 2.2 years, so the price is highly sensitive to how durable the BlueHalo-era growth turns out to be. The reverse-DCF range built from the company's own normalized margins centers near $59, with a low around $49 and a high around $71.

The model X-ray says the same thing from the other direction. The cash-flow models floor at zero because free cash flow and EBITDA are negative through the cycle and the deal accounting. What remains is asset-based and relative: a book-value floor near $86 per share, a two-stage excess-return mark near $77 as ROE converges toward the cost of equity, and a sector price-to-sales relative mark near $65 on roughly 2.0x trailing revenue. The most generous applicable method, a discounted future market cap on 30% revenue growth, reaches into the $140s but still does not clear the quote.

The spread is the information. The price is not a verdict on whether AeroVironment is a good business. It is a measure of how much future the market has already booked: a decade-plus of ceiling-rate growth on a balance sheet that just took on debt to buy it.

Catalysts

The near-term swing factor is the SCAR phased-array antenna program. The Pentagon opening it to competitive bidding sent the stock down more than 17%, because it directly touches the directed-energy and space-communications business AeroVironment acquired through BlueHalo. How that competition resolves is the single largest event for the segment the deal was built around.

The BlueHalo integration is the multi-quarter catalyst. The $4.1 billion acquisition closed and the company reorganized into Autonomous Systems and Space, Cyber and Directed Energy segments effective May 1, 2025. The market is watching whether the services-weighted BlueHalo revenue can scale without diluting the high margins of the legacy robotics platforms. Q3 fiscal 2026 results showed $408.0 million of revenue, $2.1 billion of bookings, and a record $1.1 billion funded backlog, but consensus EPS estimates were cut 11.3% over the prior thirty days, so the integration math is still being repriced.

On the legacy side, the loitering-munitions franchise keeps booking orders, including a recent $186 million U.S. Army delivery order for Switchblade 600 Block 2 and 300 Block 20. Watch backlog conversion, segment margins as BlueHalo folds in, and any further competitive-bidding decisions on programs the acquisition assumed were defensible.

Sources: StockTitan (AVAV Q3 FY2026 results and backlog), Simply Wall St (Switchblade $186M Army order; BlueHalo integration narrative), BeyondSPX/EveryTicker (BlueHalo deal scale and SCAR competitive-bidding impact), Finimize (revenue growth vs profit lag).

Peer Cohorts (Per Segment, With Filing Citations)

Uncrewed Systems (UxS) (reported)

Loitering Munition Systems (LMS) (reported)

MacCready Works (MW) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive AVAV report on boothcheck