2 Reasons to Like AVAV and 1 to Stay Skeptical
Is now still a good time to buy AVAV? Or are investors being too optimistic? Find out in our full research report, it's free.
Why Does AVAV Stock Spark Debate?
Focused on the future of autonomous military combat, AeroVironment (NASDAQ:AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.
Two Things to Like:
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company's long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, AeroVironment's sales grew at an incredible 17.4% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company's growth is profitable.
AeroVironment's EPS grew at a remarkable 12.4% compounded annual growth rate over the last five years. This performance was better than most industrials businesses.
One Reason to be Careful:
Free Cash Flow Margin Dropping
If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
As you can see below, AeroVironment's margin dropped by 22 percentage points over the last five years. If the trend continues, it could signal it's in the middle of a big investment cycle. AeroVironment's free cash flow margin for the trailing 12 months was negative 2.9%.
Final Judgment
AeroVironment's positive characteristics outweigh the negatives, and with the recent surge, the stock trades at 65.9× forward P/E (or $254.26 per share). Is now a good time to buy? See for yourself in our in-depth research report, it's free.
Stocks We Like Even More Than AeroVironment
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that's already erased most losses.
Don't let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
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