Value
7.1/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 7.0 |
| Fwd P/E | 2.7 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 41.3x
- ▸PEG: 0.22
- ▸Attractively valued
AVAV · Why this verdict
Why AeroVironment (AVAV) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock is trading below its 200-day moving average, which is itself declining at 4.4% per month, and has formed a death cross — a combination of signals that confirms a downtrend rather than a temporary pullback and represents a hard block on entry. Momentum breakdown | Price crosses above the 200-day moving average and that average's slope turns positive for more than 30 consecutive trading days, confirming the downtrend has reversed. | →Stable |
| CounterWith 62% upside to analyst price targets and a favorable reward-to-risk ratio from current levels, any positive earnings surprise or contract announcement could generate a rapid price recovery that closes the gap to the 200-day average quickly, making the technical block time-limited rather than structural. | ||
The three most recent reported quarters all produced negative EPS surprises — missing by 7%, 44%, and 7% respectively — a persistent streak of under-delivery that has systematically eroded near-term earnings credibility. Earnings | EPS surprise turns positive and exceeds 0% for 2 consecutive quarters, confirming the miss streak has broken. | →Stable |
| CounterThe oldest of the four trailing quarters produced a 16% positive surprise, suggesting the company is capable of outperforming; the recent miss streak may reflect a specific period of elevated expenses or contract timing rather than a permanent shift in execution capability. | ||
Quality sits well below the minimum acceptable floor, with free cash flow at negative 19% of revenue — the business spends more in cash than it earns per dollar of revenue — placing the company among the weakest-quality names in its peer group. Quality breakdown | Free cash flow turns positive and exceeds 0% of revenue for 2 consecutive quarters, removing the cash-burn quality concern. | →Stable |
| CounterFor a defense company scaling at 143% year-over-year, elevated cash consumption during a growth phase is structurally expected; if revenue continues to expand while overhead scales more slowly, the cash profile could normalize without any restructuring or margin change. | ||
The U.S. government accounts for 75% of revenue, flagged as a high-severity concentration risk — any meaningful shift in defense appropriations, contract renewals, or procurement priorities would have an outsized and potentially immediate impact on the revenue base. Risk breakdown | Non-government revenue grows to represent more than 35% of total revenue for 2 consecutive quarters, reducing single-customer concentration below its current critical level. | →Stable |
| CounterA single dominant government customer can provide revenue visibility and contract continuity that a more diversified commercial customer base cannot; if defense budgets remain stable or expand, the concentration may represent stability rather than vulnerability. | ||
Revenue and earnings grew 143% year-over-year — the strongest growth rate in the peer group — yet this top-line acceleration has not prevented simultaneous deterioration in free cash flow, suggesting the growth has not yet converted into durable profitability. Growth breakdown | Free cash flow turns positive for at least 1 quarter within the next 4 reported periods, providing the first evidence that revenue scale is beginning to generate real cash. | →Stable |
| CounterTop-line growth of this magnitude often precedes cash-flow improvement by several quarters as working capital and headcount scale in advance; if the underlying contract win rate is accelerating, the cash profile may inflect sharply once a critical revenue threshold is crossed. | ||
The stock is trading below its 200-day moving average, which is itself declining at 4.4% per month, and has formed a death cross — a combination of signals that confirms a downtrend rather than a temporary pullback and represents a hard block on entry.
→StableMomentum breakdown
- Expectation
- Price crosses above the 200-day moving average and that average's slope turns positive for more than 30 consecutive trading days, confirming the downtrend has reversed.
CounterWith 62% upside to analyst price targets and a favorable reward-to-risk ratio from current levels, any positive earnings surprise or contract announcement could generate a rapid price recovery that closes the gap to the 200-day average quickly, making the technical block time-limited rather than structural.
The three most recent reported quarters all produced negative EPS surprises — missing by 7%, 44%, and 7% respectively — a persistent streak of under-delivery that has systematically eroded near-term earnings credibility.
→StableEarnings
- Expectation
- EPS surprise turns positive and exceeds 0% for 2 consecutive quarters, confirming the miss streak has broken.
CounterThe oldest of the four trailing quarters produced a 16% positive surprise, suggesting the company is capable of outperforming; the recent miss streak may reflect a specific period of elevated expenses or contract timing rather than a permanent shift in execution capability.
Quality sits well below the minimum acceptable floor, with free cash flow at negative 19% of revenue — the business spends more in cash than it earns per dollar of revenue — placing the company among the weakest-quality names in its peer group.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive and exceeds 0% of revenue for 2 consecutive quarters, removing the cash-burn quality concern.
CounterFor a defense company scaling at 143% year-over-year, elevated cash consumption during a growth phase is structurally expected; if revenue continues to expand while overhead scales more slowly, the cash profile could normalize without any restructuring or margin change.
The U.S. government accounts for 75% of revenue, flagged as a high-severity concentration risk — any meaningful shift in defense appropriations, contract renewals, or procurement priorities would have an outsized and potentially immediate impact on the revenue base.
→StableRisk breakdown
- Expectation
- Non-government revenue grows to represent more than 35% of total revenue for 2 consecutive quarters, reducing single-customer concentration below its current critical level.
CounterA single dominant government customer can provide revenue visibility and contract continuity that a more diversified commercial customer base cannot; if defense budgets remain stable or expand, the concentration may represent stability rather than vulnerability.
Revenue and earnings grew 143% year-over-year — the strongest growth rate in the peer group — yet this top-line acceleration has not prevented simultaneous deterioration in free cash flow, suggesting the growth has not yet converted into durable profitability.
→StableGrowth breakdown
- Expectation
- Free cash flow turns positive for at least 1 quarter within the next 4 reported periods, providing the first evidence that revenue scale is beginning to generate real cash.
CounterTop-line growth of this magnitude often precedes cash-flow improvement by several quarters as working capital and headcount scale in advance; if the underlying contract win rate is accelerating, the cash profile may inflect sharply once a critical revenue threshold is crossed.
TrendMatrix Research · core thesis
Engine thesis — one sentence
AeroVironment is in a confirmed downtrend — below its falling 200-day moving average, with a death cross forming a hard technical block — and has missed earnings estimates in three consecutive recent quarters; despite 143% revenue growth and analyst targets implying 62% upside, the quality profile and momentum picture make this an avoid until fundamental and technical conditions materially improve.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 1.1 |
| Op margin | 1.1 |
| Net margin | 0.0 |
| Current ratio | 8.7 |
| FCF quality | 0.0 |
| Moat | 5.8 |
| Piotroski F | 5.6 |
- ▸Cash-burning: FCF -13% of revenue
- ▸Quality concerns
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 133% YoY
Momentum
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.9 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -4.0%/30d — confirmed downtrend
Sentiment
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.1 |
| Analyst rating | 7.4 |
| Price target | 9.2 |
- ▸Analyst upside: 41%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $133,502 (0.001% of mkt cap)
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.8 |
| quality rank | 1.7 |
| growth rank | 9.3 |
- ▸Industry growth leader
Technical
1.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.5 |
| support resistance | 2.7 |
| 52w position | 0.0 |
Risk (lower is worse)
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.7 |
| days to cover | 6.8 |
| volatility | 0.0 |
| put call | 6.7 |
| implied vol | 0.0 |
| beta | 5.4 |
| debt equity | 9.2 |
| news risk | 5.0 |
- ▸High IV: 93%
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 8.0 |
- ▸Earnings concerns: 1B/3M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:6.3>=5.5
- ASYMMETRY:1.8>=1.5
- INSIDER:OK
- EARNINGS_PROXIMITY:59d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- DEATH_CROSS:momentum=6.3>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.80
Upside
+27.0%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 56
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -56% (>40% off 52w high)
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Growth at 10.0 could not lift the engine output above the verdict floor.
The strongest dimensions are Growth at 10.0, Sentiment at 7.5, and Value at 7.1; the weakest are Technical at 1.7, Quality at 2.5, and Catalyst at 3.6. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 1.80 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Confirmed Technical Downtrend
Trip ifPrice closes above the 200-day moving average for more than 10 consecutive trading days while the 200-day moving average slope turns positive.
- P2Three Consecutive Earnings Misses
Trip ifEPS surprise exceeds 0% for 2 consecutive reported quarters.
- P3Quality Well Below Minimum Threshold
Trip ifFree cash flow exceeds 0% of revenue for 2 consecutive quarters.
- P4Government Customer Concentration
Trip ifNon-government revenue exceeds 35% of total revenue for 2 consecutive quarters.
- P5Strong Growth Not Yet Translating To Cash
Trip ifRevenue growth falls below 50% year-over-year for 2 consecutive quarters.