AeroVironment (AVAV) Surges 8.3%: Is This an Indication of Further Gains?

AeroVironment (AVAV) shares soared 8.3% in the last trading session to close at $344.96. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 29.9% gain over the past four weeks.

Recently, U.S. President Donald Trump proposed increasing military spending to $1.5 trillion for 2027, up sharply from the $901 billion defense budget approved for 2026, subject to approval. The proposal strengthened expectations of sustained defense spending, improving market sentiment toward defense-focused companies by enhancing long-term funding visibility and demand outlook.

This favorable budget environment has supported AeroVironment, Inc., which has strong exposure to unmanned aircraft systems and tactical missile solutions used by the U.S. military. While the company did not announce any specific contract or program update tied to the recent stock move, higher defense spending expectations increase the likelihood of continued procurement, helping boost investor confidence in the stock.

This maker of unmanned aircrafts is expected to post quarterly earnings of $0.65 per share in its upcoming report, which represents a year-over-year change of +116.7%. Revenues are expected to be $478.22 million, up 185.3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For AeroVironment, the consensus EPS estimate for the quarter has been revised 40.3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on AVAV going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

AeroVironment belongs to the Zacks Aerospace - Defense Equipment industry. Another stock from the same industry, BWX Technologies (BWXT), closed the last trading session 0.5% higher at $193.2. Over the past month, BWXT has returned 7%.

For BWX, the consensus EPS estimate for the upcoming report has changed +2.5% over the past month to $0.9. This represents a change of -2.2% from what the company reported a year ago. BWX currently has a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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