Aerospace and defense company AeroVironment (NASDAQ: AVAV) reported Q1 CY2026 results topping the market’s revenue expectations, with sales up 133% year on year to $641.6 million. On the other hand, the company’s full-year revenue guidance of $2.18 billion at the midpoint came in 0.9% below analysts’ estimates. Its non-GAAP profit of $1.84 per share was 25% above analysts’ consensus estimates.

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Company Overview

Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, AeroVironment grew its sales at an incredible 38% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. AeroVironment’s annualized revenue growth of 66.1% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Products and Services, which are 77.8% and 22.2% of revenue. Over the last two years, AeroVironment’s Products revenue (aircrafts, missile systems, satellites) averaged 75.5% year-on-year growth while its Services revenue (maintenance, training, consulting) averaged 227% growth.

This quarter, AeroVironment reported magnificent year-on-year revenue growth of 133%, and its $641.6 million of revenue beat Wall Street’s estimates by 14.7%.

Looking ahead, sell-side analysts expect revenue to grow 9.7% over the next 12 months, a deceleration versus the last two years. Still, this projection is commendable and indicates the market is forecasting success for its products and services.

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Operating Margin

Although AeroVironment was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 8.6% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Looking at the trend in its profitability, AeroVironment’s operating margin decreased by 13.5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. AeroVironment’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q1, AeroVironment generated an operating margin profit margin of 8.9%, up 3.9 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

AeroVironment’s EPS grew at a decent 9.1% compounded annual growth rate over the last five years. However, this performance was lower than its 38% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of AeroVironment’s earnings can give us a better understanding of its performance. As we mentioned earlier, AeroVironment’s operating margin expanded this quarter but declined by 13.5 percentage points over the last five years. Its share count also grew by 104%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For AeroVironment, its two-year annual EPS growth of 3.4% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q1, AeroVironment reported adjusted EPS of $1.84, up from $1.61 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects AeroVironment’s full-year EPS to grow 21.4% from $3.24 to $3.93.

Key Takeaways from AeroVironment’s Q1 Results

We were impressed by how significantly AeroVironment blew past analysts’ EBITDA expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year EBITDA guidance missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, we think this was still a decent quarter with some key metrics above expectations. The stock traded up 11.9% to $155.89 immediately following the results.

AeroVironment may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).