AVAV

AeroVironment is a leading defense unmanned-systems company — best known for its Switchblade loitering munitions and tactical drones — operating squarely in one of the strongest secular spending themes in defense. Top-line momentum reflects that: revenue grew 14.5% to $821M in FY2025, the fifth consecutive year of growth ($395M to $821M since FY2021), and gross profit rose 12.2% with a healthy 38.8% gross margin. Demand for unmanned and loitering-munition systems remains robust given global conflicts and rearmament.

But profitability moved the wrong way. Operating income fell 43.2% to $40.8M and net income dropped 26.9% to $43.6M (EPS $1.55, down 28.9%), compressing operating margin to just 5.0% and ROE to 4.9%. Operating cash flow turned slightly negative at -$1.32M (from positive the prior year) and cash fell 44.3% to $40.9M, signaling working-capital strain as the company scales production. Most significant for shareholders, shares outstanding jumped 62.4% to 45.7M — a major equity-funded expansion that heavily dilutes per-share economics and explains part of the EPS decline alongside the margin compression. The balance sheet remains lightly levered (debt of just $30.0M against $887M equity).