AeroVironment (AVAV) is back in the spotlight after Italy’s Directorate of Aeronautical Armaments and Airworthiness granted the MQ-31A military designation to its JUMP 20 unmanned aircraft system for the Italian Army.

Despite the fresh MQ-31A designation and a series of recent contract wins in Europe and the U.S., AeroVironment’s share price has come under pressure, with the 30-day share price return down 16.16% and the year to date share price return down 44.49%. At the same time, the 3-year total shareholder return of 47.40% and 5-year total shareholder return of 47.51% still point to a stronger longer term record than the past 12 months, when total shareholder return declined 48.11%.

If AeroVironment’s recent volatility has you thinking about where else growth and defense technology money is flowing, this is a good moment to scan 33 robotics and automation stocks

AeroVironment’s stock has given back a large chunk of its multi year gains, even as contracts, guidance and the MQ-31A milestone keep stacking up. Has most of the payoff already been taken, or is meaningful upside still in front of investors as the valuation stands today?

Most Popular Narrative: 49.2% Undervalued

AeroVironment last closed at $142.20, while the most followed narrative, according to C_Coffeen, points to a fair value of $280 based on a discounted cash flow framework using a 7.65% discount rate.

The bull case for AVAV isn't just about drones, it’s about ubiquity. In 20th-century warfare, air superiority required multi-million dollar jets and years of pilot training. In 2026, air superiority is increasingly defined by "low cost" systems, cheap, smart, and expendable.

Want to see what kind of growth profile sits behind that gap between $142.20 and $280? The narrative focuses on rapid earnings expansion, rising margins and a valuation multiple more often associated with fast growing tech platforms than traditional defense contractors. Curious how those assumptions compare with AeroVironment’s current revenue base and product mix, from Switchblade drones to space and cyber systems? The full narrative lays out the numbers that connect those dots.

Result: Fair Value of $280 (UNDERVALUED)

However, AeroVironment’s narrative could be tested if defense procurement for uncrewed systems slows, or if integration of BlueHalo’s space and cyber assets proves more difficult than expected.

Another View: AeroVironment Through a Sales Multiple Lens

The SWS DCF model points to a fair value of $208 for AeroVironment, which would mean the stock is trading below that estimate at $142.20. On that basis the shares look undervalued, but it is important to consider how much confidence should be placed in any model that relies on long term cash flow forecasts.

Next Steps

With AeroVironment’s story pulling in both optimistic and cautious views, it makes sense to move quickly, review the underlying data, and decide where you stand using the 2 key rewards and 1 important warning sign.

Looking for more investment ideas beyond AeroVironment?

If AeroVironment has sharpened your focus on where capital goes next, do not stop here. The market is full of other potential opportunities worth a closer look.

• Pinpoint companies with a history of resilience by scanning 82 resilient stocks with low risk scores before capital crowds into the same lower volatility stories.
• Spot potential bargains early by reviewing 47 high quality undervalued stocks while prices still reflect uncertainty instead of confidence.
• Hunt for future standouts by checking the screener containing 20 high quality undiscovered gems that have solid fundamentals yet remain off most investors’ radar.

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.