AeroVironment, Inc.

AI-generated fair value estimate for this company.

Method: 10-year, two-stage unlevered FCF DCF. FCF base: TTM revenue $2.00B (FCF currently depressed/negative due to BlueHalo integration costs). Revenue growth assumed at 12% per year for years 1-5, decelerating to 7% per year for years 6-10. FCF margin assumed to normalize from a depressed 5% in year 1 up to 12% by year 5 and 13-13.5% by year 10, producing annual FCF ranging from ~$112M (yr1) to ~$667M (yr10). Discounted at a 9% discount rate with a 3% terminal growth rate: PV of explicit FCF ~$2.36B; terminal value ~$11.46B (PV ~$4.84B); enterprise value ~$7.20B. Less net debt of ~$270.6M gives equity value ~$6.93B. Dividing by 50.63M shares outstanding gives ~$136.90/share.

Reasoning: AVAV is a normal (if currently loss-making due to acquisition accounting/integration costs) operating business with a large recurring revenue base and strong forward growth visibility (funded backlog of $2.64B), making a DCF with a normalized, ramping FCF margin the most appropriate method — using the current negative TTM FCF directly would understate normalized earning power.