AVAV or LHX: Which Stock Stands Stronger in Today's Defense Boom?

The article compares defense contractors AeroVironment (AVAV) and L3Harris Technologies (LHX), both poised to benefit from rising global defense spending. While AVAV secured a $95.9 million U.S. Army contract and partnered with Korean Air, projecting significant revenue growth, LHX won a substantial $2.26 billion contract for advanced AEW&C aircraft for South Korea. Despite AVAV's superior stock performance over the past year, the analysis concludes LHX presents a stronger investment case due to its diversified operations, larger contract wins, and a more attractive valuation (P/S F12M of 2.42X compared to AVAV's 8.43X), offering greater stability and long-term value.

Analysis

L3Harris Technologies (LHX) recently secured a substantial $2.26 billion contract in October 2025 to deliver advanced AEW&C aircraft to South Korea, underscoring its role as a diversified defense contractor with large-scale operational capabilities. Concurrently, AeroVironment (AVAV) won a $95.9 million U.S. Army contract for its Freedom Eagle missile and forged a strategic partnership with Korean Air for unmanned aircraft, highlighting its specialized growth in next-generation defense technologies. Both firms are well-positioned to benefit from the ongoing global defense boom and increased demand for advanced systems.

Financially, AVAV projects robust growth for 2025, with revenue estimated to increase by 145.5% to $2.01 billion and EPS by 10.7% to $3.63, reflecting strong momentum from recent deals. In contrast, LHX anticipates a more modest 2.1% revenue growth to $21.78 billion for 2025, alongside an expected 19.7% decline in EPS to $10.52, although its 2025 and 2026 EPS estimates have recently moved north. This indicates AVAV is in a higher growth phase, albeit from a smaller base.

Despite AVAV's superior stock performance over the past year, gaining 71.4% compared to LHX's 17.7%, LHX presents a more attractive valuation with a forward 12-month Price/Sales multiple of 2.42X versus AVAV's 8.43X. The analysis suggests LHX offers greater stability and consistent performance potential due to its diversified operations and larger contracts, positioning it as a stronger overall investment choice for long-term value, which aligns with its Zacks Rank #2 (Buy) compared to AVAV's Zacks Rank #3 (Hold).

Key Decisions for Investors

• Consider L3Harris Technologies (LHX) for its diversified operations, attractive valuation (P/S F12M of 2.42X), and potential for stability and consistent performance in the defense sector.
• For investors seeking higher growth potential, AeroVironment (AVAV) warrants attention given its significant projected revenue growth of 145.5% and recent contract wins, but be mindful of its higher valuation (P/S F12M of 8.43X).
• Monitor global geopolitical developments and defense spending trends, as both companies are direct beneficiaries of increased investment in advanced defense technologies and international partnerships.