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AeroVironment (AVAV -11.08%) stock fell 15% through 11:50 a.m. ET Thursday despite beating earnings in its fiscal Q4 2024 report last night. Analysts forecast the maker of small military drones would earn $0.22 per share on $188.6 million in quarterly sales. In fact, AeroVironment earned $0.43 per share on sales of $197 million.

Investors are selling off AV stock regardless.

AeroVironment Q4 earnings

Nor are they necessarily wrong to do so. AeroVironment’s Q4 earnings come with significant caveats — and its guidance wasn’t great, either. First, the $0.43 in “earnings” that the company reported was of the pro forma variety. When calculated according to generally accepted accounting principles (GAAP), AV’s Q4 profit was only $0.22 per share — exactly what Wall Street predicted — raising questions about whether the company actually “beat earnings” at all.

Full-year profits were better, $2.18 per share GAAP, and much better than last year’s $7.04-per-share loss. But free cash flow for the year remained negative at $7.7 million.

Is AeroVironment stock a buy?

Turning to guidance, AeroVironment management predicts fiscal 2025 revenues between $790 million and $820 million, in line with Wall Street’s existing forecast. Assuming AV hits the midpoint of that guidance, it would represent a significant slowdown from fiscal 2024 (in which it grew revenues 33%) to fiscal 2025 (where revenues would grow only 12%). Pro forma profits, furthermore, are likely to fall short of the Street’s expected $3.36 per share. AV says earnings will range from $3.18 to $3.49 per share, which is $3.33 at the midpoint.

Last but not least, management noted that its funded backlog (which foreshadows future sales growth) declined from $424 million a year ago to about $400 million as of the end of April — another indicator of slowing growth for the defense growth stock.

All things considered, I’m not at all convinced AV stock is worth the 50 times forward earnings it currently costs. Investors selling today are probably making the right call.