The recent, sharp decline of Aerovironment (AVAV) stock makes the name attractive for some investors, given the strong quarterly operating results that the firm recently released, along with the high potential of its anti-drone lasers and the Pentagon’s continued, elevated interest in drones and devices that counter such aircraft.
Further, the problems that America is facing with opening the Strait of Hormuz could make AVAV’s drones more attractive to the agency.
AVAV Stock Sank and the Firm Reported Strong Operating Results
In the month that ended on March 18, AVAV stock tumbled 23%. As a result, the shares’ forward price-earnings ratio has dropped to 57 times from 200 times on October 31, 2025. While the name was far too expensive on October 31, its current valuation is attractive, given the company’s strong growth outlook.
Excluding non-cash items that do not reflect significantly on Aerovironment’s growth or the profitability of its operations, the firm reported strong financial results for its third quarter which ended in January. And while the company may lose a sizable contract with the Space Force, the firm’s funded backlog and book-to-bill ratio remain quite impressive, strongly indicating that its growth will nonetheless remain quite elevated going forward.
Its revenue soared 143% versus the same period a year earlier to $408 million, while its EBITDA, excluding certain items, more than doubled to $44.5 million, compared with fiscal Q3 of the previous year. Without the company’s acquisition of Blue Halo, its revenue still would have climbed by 38% year-over-year. Finally, Aerovironment’s “funded backlog” jumped to $1.1 billion at the end of January, versus $726.6 million at the end of April 2025, while its book-to-bill ratio came in at an impressive 1.6 times for the first three quarters of its fiscal year.
Aerovironment’s Anti-Drone Lasers Have a Great Deal of Potential
The company’s Locust lasers can destroy drones , and lasers cost “just a few dollars a shot,” while the U.S. is currently using interceptor missiles that are worth “millions” each in order to complete the same mission, CBS recently reported.
Aerovironment’s Locust lasers have already been provided to the Pentagon which plans to use them on America’s southern border, and they have been utilized in warfare “around the world,” CBS noted. Consequently, it appears that the systems, which cost $8 million each, are operational and that AVAV could provide them to the Pentagon in large numbers relatively quickly and easily. And since President Donald Trump reportedly called lasers “incredible,” the Department of War could very well order many more Locusts soon.
AVAV’s Drones Could Help Open Hormuz and Carry Out Similar Missions
America is clearly having trouble opening the Strait of Hormuz, as President Donald Trump has repeatedly asked for help from other nations in order to carry out the objective. Aerovironment’s drones could be used to help eliminate Iranian forces from the shoreline to prevent them from threatening shipping on the waterway. And the Pentagon may decide to buy many more drones from the company because it wants to use them to carry out similar missions in the future.
The Department Has High Interest in Drones and Counter-Drone Devices
With the Pentagon looking to purchase 30,000 drones “within months,” the agency’s interest in the aircraft remains extremely high.
Moreover, the department is clearly looking for new, cheaper ways to combat enemy drones, and AVAV has multiple offerings other than its laser that can do so.
Valuation and the Bottom Line on AVAV Stock
The shares, as I noted earlier, are now changing hands at a forward price-earnings ratio of 57 times, down from 70.4 times as of January 31 and 200 times as of October 31.
At the current level, I believe that the name is attractive, given its strong growth and multiple, powerful, positive catalysts. However, in light of the fact that its valuation is still somewhat elevated, it’s only appropriate for growth investors.
*This article is intended to be informational only; it is not financial advice.
