AeroVironment's Five-Year Earnings Decline May Be Coming into Focus Amid NASDAQ:AVAV's 3.8% Weekly Pullback

AeroVironment's NASDAQ:AVAV stock has declined 3.8% this week, but its five-year return of 215% and recent 52% gain in the last three months may be attracting investors. The company's modest trailing twelve-month profit may not be a priority, but its 18% revenue growth per year for the last five years has contributed to a 26% share price growth. AeroVironment seems like a high growth stock, making it a potential candidate for growth investors.

AeroVironment (AVAV) has seen its stock decline by 3.8% this week, yet it remains a high-growth stock that has attracted investors due to its strong five-year return of 215% and a recent 52% gain over the last three months. The company's trailing twelve-month profit may not be a priority, but its consistent revenue growth of 18% per year over the last five years has contributed to a 26% share price growth.

The company's recent earnings report [3] highlighted that while net income declined in fiscal 2025, revenues rose by 14% from the previous year. The stock's performance has been driven by its focus on advanced unmanned aircraft systems and electric vehicle charging solutions. The company's revenue growth has been impressive, with a compounded annual growth rate (CAGR) of 17.4% over the last five years, outperforming the average industrials company [2].

However, investors should also consider the potential risks. The company's free cash flow margin has been dropping, indicating a significant investment cycle. This trend could impact the company's profitability in the near term. Additionally, the stock trades at a premium valuation, with a forward P/E ratio of 77.51, which is higher than the industry average of 39.06 [1].

Despite these concerns, the company's strong long-term earnings per share (EPS) growth of 12.4% CAGR over the last five years [2] suggests that the company's growth is profitable. The company's focus on the future of autonomous military combat and its recent performance may continue to attract investors.

In conclusion, while AeroVironment's stock has seen a decline this week, its strong revenue growth and long-term EPS growth make it an attractive option for growth investors. However, investors should be aware of the company's free cash flow margin and its premium valuation. As always, it's crucial to conduct thorough research and consider multiple factors before making investment decisions.

References:
[1] https://www.nasdaq.com/articles/aerovironment-avav-outpaces-stock-market-gains-what-you-should-know-0
[2] https://finance.yahoo.com/news/2-reasons-avav-1-stay-040419349.html
[3] https://www.nasdaq.com/articles/aerovironment-annual-profit-declines-revenue-14