AVAV Outperforms Industry in the Past Month: How to Play the Stock?

AeroVironment, Inc. AVAV stock has gained 35.1% in the past month, outpacing both the Zacks Aerospace-Defense Equipment industry’s growth of 3.9% and the broader Zacks Aerospace sector’s gain of 6.8%. It also came above the Zacks S&P 500 composite’s return of 2% in the same time frame.

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Other industry players, such as Teledyne Technologies TDY and Astronics Corporation ATRO, have also delivered a similar stellar performance in the past month. Shares of TDY and ATRO have risen 10.2% and 21.3%, respectively, in the said period.

With AVAV’s stock recently gaining momentum, some investors may be inclined to buy the shares quickly. However, it is important to determine whether the company’s fundamentals can support sustained long-term growth or whether the recent rally may be short-lived. Assessing AVAV’s growth prospects and potential risks can help investors make a more informed investment decision.

Tailwinds for AVAV

AVAV’s recent share gains appear to be supported by strong demand for its autonomous and unmanned defense technologies, along with new partnerships and contract wins. In July 2026, the company entered into a strategic teaming agreement with Applied Intuition to expand uncrewed teaming capabilities for the U.S. military and its allies.

As part of the agreement, Applied Intuition’s Acuity ISR/Strike software will be integrated with AVAV’s Mayhem 10 launched effects system. The combined solution is expected to support autonomous hunter-killer and swarm operations, allowing multiple systems to work together with limited operator involvement in contested environments. The partnership could strengthen AVAV’s capabilities in autonomous warfare and improve its position in the growing market for advanced unmanned systems.

Also in July 2026, AVAV received a $117.3 million contract from the U.S. Army for its P550 electric vertical takeoff and landing (eVTOL) unmanned aerial system under the Army’s Long Range Reconnaissance program. The award reflects the Army’s increasing focus on scalable and adaptable unmanned technologies for modern warfare. The contract also provides AVAV with an opportunity to expand the use of its P550 platform and strengthen its relationship with the U.S. military.

Together, the partnership and contract win highlight continued demand for AVAV’s autonomous defense solutions and could support growth in its future business.

Estimates for AVAV’s Sales & Earnings

The Zacks Consensus Estimate for AVAV’s fiscal 2027 sales implies year-over-year growth of 9.8%, while estimates for fiscal 2028 sales indicate an improvement of 15.8%.

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The stock’s annual bottom-line estimates have moved south over the past 60 days.

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Valuation

In terms of valuation, AVAV’s forward 12-month price-to-earnings (P/E) is 54.81X, a premium to the industry average of 41.94X. This suggests that investors will be paying a higher price than the company's expected earnings growth compared with its industry average.

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Risks to Consider Before Choosing AVAV

AeroVironment faces several industry-specific challenges that could weigh on its operations and growth. Labor shortages could limit production capacity, delay contract deliveries and make it more difficult for the company to meet customer requirements on time.

Supply-chain disruptions also remain a concern, as shortages or delays in critical components could interrupt manufacturing, raise costs and affect the timely delivery of its systems. Industry peers such as Teledyne Technologies and Astronics face similar labor and supply-chain pressures, highlighting the broader challenges affecting aerospace and defense manufacturers.

Liquidity Position of AVAV

AVAV has a current ratio of 4.30. The ratio, being more than one, indicates that AVAV possesses sufficient capital to pay off its short-term debt obligations.

Its industry peers, Teledyne Technologies and Astronics, also maintain current ratios above one. TDY has a current ratio of 2.18, while ATRO holds 2.97.

Wrapping Up

Considering AeroVironment’s premium valuation compared with its industry, investors interested in this stock should wait for a better entry point. However, given the company’s strong growth potential and solid liquidity position, current shareholders may consider holding the stock.

AVAV currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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