• Wondering if AeroVironment at around US$214 per share is still a good deal, or if the easy gains are already behind it? This article focuses squarely on what the current valuation might be telling you.
• The stock has moved sharply in the short term, with a 23.1% gain over the last 7 days and 16.8% over the last 30 days, while the return over the last year sits at 20.4%. The 3 year and 5 year returns are 116.9% and 92.6% respectively, and year to date the stock is down 16.3%.
• These swings have put AeroVironment back on the radar for investors who track momentum and are questioning how the current price lines up with underlying value. Evergreen interest in defense and unmanned systems companies also keeps attention on whether this stock is priced fairly against its fundamentals.
• On Simply Wall St's 6 point valuation checklist, AeroVironment currently scores 1 out of 6. The rest of this article will walk through different valuation methods to see what that means in practice, and finish with a more rounded way to think about valuation beyond just the 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, adds up all the cash AeroVironment is expected to generate in the future and discounts those cash flows back to today to estimate what the stock could be worth right now.

For AeroVironment, the latest twelve month Free Cash Flow (FCF) shows a loss of about $235.1 million. Analysts provide explicit FCF estimates out to 2028, with Simply Wall St extrapolating beyond that. By 2028, FCF is projected at about $216.2 million, and by 2035 the model extends this to around $513.4 million, all in dollars and still well below the $1 billion mark.

Using a 2 Stage Free Cash Flow to Equity model, these projected cash flows are discounted back to today to produce an estimated intrinsic value of about $143.52 per share. Compared with the recent share price around $214, the model suggests AeroVironment is about 49.4% above this estimate, which points to the stock trading at a premium on this cash flow view.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests AeroVironment may be overvalued by 49.4%. Discover 46 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: AeroVironment Price vs Sales

For companies where earnings can be uneven, the Price to Sales, or P/S, ratio is often a useful cross check because it compares the value of the equity to the revenue the business generates rather than to accounting profit.

What counts as a reasonable P/S ratio depends on how quickly revenue is expected to grow and how risky those cash flows are. Higher growth and lower perceived risk can support a higher multiple, while slower growth or higher uncertainty typically line up with a lower one.

AeroVironment currently trades on a P/S of 6.71x, compared with the Aerospace & Defense industry average of 5.29x and a peer group average of 9.20x. Simply Wall St’s Fair Ratio for AeroVironment is 3.94x, which is its proprietary view of what the P/S should be given factors such as earnings growth, industry, profit margin, market cap and risk profile.

This Fair Ratio is more tailored than a simple peer or industry comparison because it aims to adjust for company specific characteristics rather than assuming all stocks deserve the same multiple. Setting the current 6.71x against the 3.94x Fair Ratio points to AeroVironment trading above this benchmark.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your AeroVironment Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach a clear story about AeroVironment to the numbers by spelling out your view on future revenue, earnings and margins, linking that story to a financial forecast, then to a Fair Value that you can compare directly with the current share price. All of this happens within an easy Community page tool that updates when new news or earnings arrive. For example, one investor might build a bullish AeroVironment Narrative with a Fair Value of US$450 that leans into unmanned and space opportunities. Another might set a more cautious Fair Value of US$235 that focuses on SCAR contract risk and regulation. You can see both side by side and decide which story fits your own expectations best.

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.