AeroVironment, Inc. (NASDAQ:AVAV) Earnings Preview and Financial Analysis

• AeroVironment's upcoming quarterly earnings are projected to show a significant revenue increase of 139.3% year-over-year, despite an anticipated decline in EPS by 61.8%.
• The company's stock historically declines following earnings announcements, with a median drop of 6.6% over the past five years.
• AeroVironment's financial metrics indicate a high valuation with a P/E ratio of approximately 144.27 and a strong positioning within the defense sector, supporting a target price of $300 per share.

AeroVironment, Inc. (NASDAQ:AVAV) is a prominent player in the drone manufacturing industry. The company is known for its innovative solutions in unmanned aerial systems (UAS) and has expanded its capabilities through strategic acquisitions like BlueHalo. This acquisition has bolstered its position in counter-UAS, cyber, and space domains, making it a comprehensive defense platform. AeroVironment's market capitalization stands at $11.6 billion, reflecting its significant presence in the market.

On September 9, 2025, AeroVironment is set to release its quarterly earnings, with Wall Street estimating an earnings per share (EPS) of $0.34 and projected revenue of $437 million. This marks a notable shift from the previous year's same quarter, where the company reported an EPS of $0.89 on revenues of $189 million. Despite the anticipated decline in EPS by 61.8%, the revenue is expected to see a substantial increase of 139.3% year-over-year, highlighting the company's growth trajectory.

Historically, AeroVironment's stock has shown a tendency to decline following earnings announcements, with a negative one-day return occurring in 55% of cases over the past five years. The median drop has been 6.6%, with the most significant one-day decrease reaching 15.9%. Traders may consider these historical patterns when deciding on their investment strategies, especially given the stable consensus EPS estimate over the past month, which suggests no major revisions by analysts.

AeroVironment's financial metrics reveal a high valuation, with a price-to-earnings (P/E) ratio of approximately 144.27 and a price-to-sales ratio of about 14.21. These figures indicate that investors are willing to pay a premium for the company's sales and earnings. However, the enterprise value to operating cash flow is notably negative at -8,511.18, which may point to challenges in generating cash flow from operations. Despite this, the company's low debt-to-equity ratio of 0.073 and strong current ratio of 3.52 suggest a conservative approach to debt and a solid ability to cover short-term liabilities.

AeroVironment's optimistic outlook is supported by its strong positioning within the defense supercycle and an expanded total addressable market (TAM). The company benefits from a record backlog, accelerating order growth, and robust government demand in both the U.S. and Europe. This supports a premium valuation multiple and potential for structural rerating, with a target price of $300 per share, representing a 25% upside.