AeroVironment Q3 Earnings Loom: What Should Investors Do Now?

AeroVironment AVAV is slated to release third-quarter fiscal 2026 results on March 10, 2026, after market close.

The Zacks Consensus Estimate for revenues is pegged at $473 million, indicating an improvement of 182.1% from the year-ago quarter’s reported figure. The consensus estimate for earnings is pegged at 68 cents per share, suggesting an improvement of 126.7% from the prior-year quarter’s reported figure of 30 cents.

AVAV’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters and missed in three, the average negative surprise being 22.65%.

Earnings Whisper for AVAV Stock

Our proven model does not conclusively predict an earnings beat for AVAV this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

AVAV has an Earnings ESP of -23.04% and a Zacks Rank #5 (Strong Sell) at present.

You can see the complete list of today’s Zacks #1 Rank stocks here.

A Recent Defense Release

The Boeing Company BA incurred an adjusted loss of $1.91 per share in the fourth quarter of 2025, wider than the Zacks Consensus Estimate of a loss of 40 cents. However, the bottom line improved from the year-ago quarter’s reported loss of $5.90 per share.

Revenues amounted to $23.95 billion, which outpaced the consensus estimate of $21.73 billion by 8%. The top line also surged 57.1% from the year-ago quarter’s reported figure of $15.24 billion.

A Stock Worth a Look

Draganfly DPRO is set to report fourth-quarter 2025 earnings soon. It has an Earnings ESP of +4.00% and a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for Draganfly’s loss is pegged at 13 cents per share, indicating year-over-year improvement. The consensus estimate for its sales is pegged at $1.7 million, indicating year-over-year growth of 46.5%.

Key Factors to Consider for AVAV’s Q3 Results

Higher product revenues, primarily driven by the acquisition of BlueHalo in the first quarter of fiscal 2026 and increased global demand for the company’s Switchblade products associated with current global conflicts, are likely to have bolstered AVAV’s product sales in the to-be-reported quarter.

Higher service revenues, primarily driven by the acquisition of BlueHalo, are likely to have bolstered AVAV’s service sales.

Price Performance & Valuation

AVAV shares have surged a solid 66.7% in the past year, outperforming the Zacks Aerospace-Defense Equipment industry’s growth of 45.4% as well as the broader Zacks Aerospace sector’s rise of 37.7%. It also came in above the S&P 500’s gain of 21.2% in the same time frame.

Shares of Draganfly and Boeing have surged 177.5% and 44%, respectively.

AVAV’s Price-to-Sales (Forward 12 Months)

From a valuation perspective, AVAV’s forward 12-month price-to-sales (P/S) is 4.84X, a discount to its industry’s average of 12.50X. This suggests that investors will be paying a lower price than the company's expected sales growth compared with its industry.

Its industry peers are currently trading at a discount compared with AVAV. While the forward 12-month price/sales multiple for DPRO is 1.97X, the same for BA is 1.76X.

Investment Thesis

Although demand in the global defense technology market remains strong, AVAV faces several challenges that investors should consider. The company remains heavily dependent on government and military contracts, which exposes it to risks related to defense budget decisions, procurement delays and policy changes. Any slowdown in contract awards or shifts in spending priorities could affect its revenue visibility.

AVAV is also dealing with ongoing supply-chain constraints, rising input costs and higher labor expenses, which may pressure margins. In addition, the company continues to invest significantly in expanding production capacity and integrating acquired technologies, which could weigh on near-term profitability.

Even though rising global defense spending and the growing use of unmanned aerial systems support long-term demand for AVAV’s products, the company’s dependence on government programs and cost pressures remain notable concerns that investors should closely monitor.

Conclusion

AVAV’s upcoming fiscal third-quarter results are expected to reflect strong year-over-year growth in revenues and earnings, supported by higher product and service sales, particularly from the BlueHalo acquisition and rising demand for Switchblade systems amid ongoing global conflicts. However, supply-chain disruptions, rising input costs and labor availability challenges may continue to create operational pressures. Considering these factors and the company’s recent earnings surprise history, investors may prefer to remain cautious ahead of the earnings release despite strong demand trends in the defense drone market.

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

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