AeroVironment’s (NASDAQ:AVAV) Q2 CY2026: Strong Sales

Aerospace and defense company AeroVironment (NASDAQ:AVAV) reported Q2 CY2026 results topping the market’s revenue expectations, with sales up 5.7% year on year to $480.5 million. On the other hand, the company’s full-year revenue guidance of $2.18 billion at the midpoint came in 0.7% below analysts’ estimates. Its non-GAAP profit of $0.59 per share was significantly above analysts’ consensus estimates.

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Company Overview

Focused on the future of autonomous military combat, AeroVironment (NASDAQ:AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, AeroVironment grew its sales at an incredible 37.4% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. AeroVironment’s annualized revenue growth of 63% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

We can dig further into the company’s revenue dynamics by analyzing its most important segments, Products and Services, which are 68.5% and 31.5% of revenue. Over the last two years, AeroVironment’s Products revenue (aircrafts, missile systems, satellites) averaged 65.4% year-on-year growth while its Services revenue (maintenance, training, consulting) averaged 195% growth.

This quarter, AeroVironment reported year-on-year revenue growth of 5.7%, and its $480.5 million of revenue exceeded Wall Street’s estimates by 5%.

Looking ahead, sell-side analysts expect revenue to grow 13.9% over the next 12 months, a deceleration versus the last two years. Still, this projection is noteworthy and implies the market is forecasting success for its products and services.

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Operating Margin

AeroVironment’s high expenses have contributed to an average operating margin of negative 7.9% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Analyzing the trend in its profitability, AeroVironment’s operating margin decreased by 12.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. AeroVironment’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, AeroVironment generated a negative 2.3% operating margin.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

AeroVironment’s EPS grew at an astounding 18.7% compounded annual growth rate over the last five years. Despite its operating margin improvement during that time, this performance was lower than its 37.4% annualized revenue growth, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

We can take a deeper look into AeroVironment’s earnings to better understand the drivers of its performance. As we mentioned earlier, AeroVironment’s operating margin expanded this quarter but declined by 12.4 percentage points over the last five years. Its share count also grew by 102%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For AeroVironment, its two-year annual EPS growth of 9.6% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q2, AeroVironment reported adjusted EPS of $0.59, up from $0.32 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects AeroVironment’s full-year EPS to grow 6.9% from $3.51 to $3.75.

Key Takeaways from AeroVironment’s Q2 Results

It was good to see AeroVironment beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year EBITDA guidance slightly missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 4.6% to $147.70 immediately after reporting.

Indeed, AeroVironment had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).