Is AeroVironment, Inc. overvalued or undervalued?

As of 9 September 2025, the valuation grade for AeroVironment, Inc. has moved from expensive to risky, indicating a potential shift in investor sentiment. The company appears to be overvalued, as evidenced by its high P/E ratio of 263, a Price to Book Value of 10.12, and an EV to EBITDA of 123.74. In comparison, peers such as Leonardo DRS, Inc. have a more reasonable P/E of 43.14 and EV to EBITDA of 26.25, while Huntington Ingalls Industries, Inc. shows a P/E of 27.01 and EV to EBITDA of 21.02, highlighting the significant premium AeroVironment commands.
Despite the overvaluation, AeroVironment has delivered impressive stock returns, outperforming the S&P 500 with a YTD return of 84.18% compared to the index's 12.22%. This strong performance over multiple periods, including a 5Y return of 346.91% versus the S&P 500's 96.61%, may reflect market optimism, but the valuation metrics suggest caution for potential investors.