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AeroVironment: Well-Positioned In Evolving Industry

Mar. 08, 2020 9:51 PM ETAeroVironment, Inc. (AVAV)LMT, NOC, SFTBF, SFTBY1 Comment


  • AeroVironment's Group 1 UAS products will become increasingly applicable in the changing landscape.
  • AeroVironment is making solid gains in the highly promising HAPS space.
  • Despite AeroVironment's dominance in small UAS, the company is starting to face more competition.

AeroVironment (NASDAQ:AVAV) continues to be a dominant presence in the small UAS (unmanned aircraft systems) industry. While AeroVironment's long-term path remains bright, the company is experiencing some headwinds. Most notably, the US military is potentially looking for Switchblade alternatives to the detriment of AeroVironment. The company also recently reported disappointing Q3 results, missing on both revenue and EPS.

AeroVironment's Q3 revenue of $61.89 million and EPS of -$0.04 missed expectations by $6.94 million and $0.19 respectively. Unsurprisingly, the company's stock price plunged following the release of quarterly results. Despite the recent bad news, AeroVironment is still very well-positioned in high potential industry.

Dominance in Small UAS

Small UAS is an increasingly important market. The growth of robotics and artificial intelligence is rapidly expanding the usefulness of smaller-sized drones and other unmanned aerial vehicles. With traditional warfare on the decline and asymmetric warfare on the rise, the stealth and agility offered by small UAS will grow in importance. Small UAS will almost certainly be far more cost-effective than large UAS in the new landscape.

Small UAS like AeroVironment's Raven will likely have a growing impact on the battlefield.

Source: Intelligent Aerospace

AeroVironment continues to maintain a strong foothold in the small UAS industry. The company continues to be a preferred partner of many governmental organizations, including the US military. In fact, AeroVironment dominates the fixed-wing Group 1(0-20 lbs.) UAS industry and is a preferred supplier of the US government and countless allied governments.

AeroVironment's Group 1 UAS products like the Raven and WASP are some of the most advanced in the industry. Given that small UAS accounts for 70% of AeroVironment's overall revenue at $162.9 million (first three quarters), the company will continue to innovate heavily in the space. Demand for small UAS will likely continue to grow at a fast pace moving forward, putting AeroVironment

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Comments (1)

Charlie's Munger profile picture
Too expensive
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