U.S. Markets closed

When Should You Buy AeroVironment, Inc. (NASDAQ:AVAV)?

Simply Wall St

AeroVironment, Inc. (NASDAQ:AVAV), which is in the aerospace & defense business, and is based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine AeroVironment’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for AeroVironment

Is AeroVironment still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17% below my intrinsic value, which means if you buy AeroVironment today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $66.21, then there’s not much of an upside to gain from mispricing. Furthermore, AeroVironment’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will AeroVironment generate?

NasdaqGS:AVAV Past and Future Earnings April 8th 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. AeroVironment’s earnings over the next few years are expected to increase by 80%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in AVAV’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on AVAV, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on AeroVironment. You can find everything you need to know about AeroVironment in the latest infographic research report. If you are no longer interested in AeroVironment, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.