Does AeroVironment’s Soaring 2025 Share Price Still Make Sense After Recent Pullback?

• If you are wondering whether AeroVironment is still a smart buy after its run up, you are not alone. This article is going to unpack what the current price might really imply about future returns.
• The stock has pulled back around 2.7% over the last week and roughly 25.6% over the past month, but that comes after a powerful move with returns of about 73.7% year to date, 64.1% over 1 year, and more than 200% over 3 and 5 years.
• Recent headlines have focused on AeroVironment's growing role as a key supplier of unmanned systems and related technologies to defense customers, as geopolitical tensions keep demand for advanced drone and missile systems in the spotlight. At the same time, analysts and commentators have been reassessing how durable that demand could be, which helps explain why the market has been quick to reprice the stock as sentiment shifts.
• Right now, our framework suggests AeroVironment is undervalued on just 1 out of 6 valuation checks, giving it a value score of 1/6. Next, we will walk through what different valuation approaches are saying about the stock, and then finish with a more holistic way to think about its true worth beyond the headline numbers.

AeroVironment scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: AeroVironment Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business is worth today by projecting the cash it could generate in the future and discounting those cash flows back to the present.

For AeroVironment, the latest twelve month Free Cash Flow is negative at around $193.8 Million, which means the company is currently investing heavily or experiencing short term cash pressure. Analysts expect this to improve sharply over the next few years, with projected Free Cash Flow rising to about $239.7 Million by 2028. Simply Wall St extrapolates this growth further out to around $634.1 Million by 2035 using a 2 stage Free Cash Flow to Equity model.

When all of these future cash flows are discounted back, the model arrives at an estimated intrinsic value of roughly $182.10 per share. Based on today’s share price, that implies AeroVironment is about 49.2% overvalued according to this DCF snapshot, so the current market optimism is already pricing in a lot of future success.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests AeroVironment may be overvalued by 49.2%. Discover 908 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for AeroVironment.

Approach 2: AeroVironment Price vs Sales

For companies where current profits are volatile or not yet reflective of their true potential, valuing the business on Price to Sales can be more informative than earnings based metrics. Revenue tends to be more stable than earnings, so the Price to Sales, or P/S, ratio gives a cleaner view of how much investors are willing to pay for each dollar of sales.

In general, higher growth and lower risk justify a higher P/S multiple, while slower or uncertain growth, thinner margins, or greater risk call for a lower one. AeroVironment currently trades on a P/S of about 12.44x, which is well above both the Aerospace and Defense industry average of roughly 3.02x and the peer group average of around 5.76x.

Simply Wall St’s Fair Ratio framework estimates what a reasonable P/S multiple should be after factoring in AeroVironment’s growth outlook, profitability, industry, market cap and risk profile. For AeroVironment, this Fair Ratio is 5.29x, making it more tailored than a simple comparison to peers or the industry. Since the current 12.44x multiple stands significantly above the 5.29x Fair Ratio, the stock looks richly priced on this measure.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your AeroVironment Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple way to turn your view of AeroVironment into a clear story that links its business drivers to a financial forecast and then to a fair value you can actually act on.

On Simply Wall St’s Community page, Narratives let you spell out how you think revenue, earnings and margins will evolve. They then automatically translate that story into projected financials and a fair value estimate that you can compare directly with today’s share price to decide whether AeroVironment appears more suitable as a buy, hold or sell candidate for your own strategy.

Because Narratives update dynamically as new earnings, contracts or news come in, you are not limited to a static model. You can also see how other investors interpret the same information. For example, one Narrative might argue that expanding defense demand and new markets justify a fair value near $404, while a more cautious Narrative focuses on contract risk and margin pressure to support a much lower fair value and a more conservative stance on the stock.

Do you think there's more to the story for AeroVironment? Head over to our Community to see what others are saying!

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.

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