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AAR
(NYSE:AIR)
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Rating:70Outperform
Price Target:
$117.00
▼(-15.57% Downside)
Action:Upgraded
Date:09/30/26
The score is driven primarily by improving financial performance (strong revenue growth, better TTM profitability and free cash flow) and a favorable earnings-call outlook (raised guidance and a strategically significant acquisition with identified synergies). These positives are partially offset by weak technicals (price below major moving averages and negative MACD) and a moderate valuation profile (P/E ~21.6 with no dividend yield provided).
Positive Factors
Broad revenue growth
Broad-based growth across commercial and government aviation services indicates strong customer demand and expanding execution across AAR’s platform. Organic gains reduce reliance on acquisitions, while higher scale can support continued investment in capabilities and customer programs.
Negative Factors
Acquisition-driven leverage increase
The MRO Holdings financing would significantly increase leverage and interest burden near closing, reducing financial flexibility if integration or cash generation underperforms. Deleveraging targets provide a path forward, but depend on realizing synergies and sustaining the acquired business’s cash flow.
Read all positive and negative factors
Positive Factors
Negative Factors
Broad revenue growth
Broad-based growth across commercial and government aviation services indicates strong customer demand and expanding execution across AAR’s platform. Organic gains reduce reliance on acquisitions, while higher scale can support continued investment in capabilities and customer programs.
Read all positive factors
AAR (AIR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.00B
Dividend Yield1.67%
Average Volume (3M)621.79K
Price to Earnings (P/E)20.2
Beta (1Y)1.15
Revenue Growth21.97%
EPS Growth515.59%
CountryUS
Employees7,100
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)4.93
Shares Outstanding40,194,210
10 Day Avg. Volume476,889
30 Day Avg. Volume621,788
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)2.47
Price to Sales (P/S)1.27
P/FCF Ratio126.51
Enterprise Value/Market Cap1.50
Enterprise Value/Revenue1.73
Enterprise Value/Gross Profit9.06
Enterprise Value/Ebitda14.97
Forecast
1Y Price Target
$150.00Price Target Upside8.24% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)5.84
Revenue Forecast (FY)$3.69B
AAR Business Overview & Revenue Model
Company Description
AAR Corp. delivers a wide array of products and services to the global commercial aviation, government, and defense sectors. Its Aviation Services division focuses on comprehensive aftermarket support, encompassing inventory management, distributi...
How the Company Makes Money
AAR primarily makes money by selling aviation aftermarket services and products, generating revenue from a mix of service work and parts-related transactions. Key revenue streams include: (1) Maintenance, Repair and Overhaul (MRO) and other repair...
AAR Earnings Call Summary
Earnings Call Date:Sep 28, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Mar 23, 2027
Earnings Call Sentiment Positive
The call was strongly optimistic, characterized by broad-based first-quarter growth, higher margins, record cash flow, a raised full-year sales outlook and continued strong demand. Management also presented the MRO Holdings acquisition as strategically transformative, with substantial scale, profitability, cash generation and synergy opportunities. The primary challenges discussed were temporary HAECO integration dilution, the Indianapolis facility exit, declining WASS activity and higher leverage at acquisition close, but management provided specific timelines and deleveraging targets for these matters.Positive Updates
Strong First-Quarter Companywide Performance
AAR reported total sales of $918 million, up 24% year-over-year, including 11% organic growth. Growth was broad-based across all three key segments, with commercial sales up 28% and government sales up 14%. Commercial customers represented 73% of sales and government customers represented 27%.
Negative Updates
HAECO Americas Integration Diluted Repair Segment Margins
Repair, Engineering and Software adjusted EBITDA margin declined 120 basis points year-over-year to 11.9%, as the ongoing HAECO Americas integration was dilutive to the segment. Management said the business is being restructured, including exiting unprofitable work and bringing in more appropriate contracts.
Read all updates
Q1-2027 Updates
Positive
Negative
Strong First-Quarter Companywide Performance
AAR reported total sales of $918 million, up 24% year-over-year, including 11% organic growth. Growth was broad-based across all three key segments, with commercial sales up 28% and government sales up 14%. Commercial customers represented 73% of sales and government customers represented 27%.
Read all positive updates
Company Guidance
For the second quarter, AAR expects total sales growth, excluding Legacy Commercial Programs, of 14% to 16% and adjusted EBITDA margin, also excluding LCP, of 13.0% to 13.4%; for the full year, it now expects growth, excluding LCP, in the low teens, with both the second quarter and full year fiscal 2027 outlooks excluding any impact from the MRO Holdings acquisition. AAR expects to close the transaction in its fiscal third quarter ending February 2027, expects approximately $75 million of run rate cost synergies within the next 3 to 4 years, and expects adjusted EBITDA margins to reach 19% to 20% over the next 3 to 4 years, including the cost synergies identified. MRO Holdings is expected to generate approximately $1 billion of adjusted sales, $285 million of adjusted EBITDA, 27% adjusted EBITDA margin and more than $200 million of adjusted operating cash flow in calendar 2026; AAR expects net leverage to be approximately 3.6x at closing, decline to approximately 3x on a realized synergies basis within 24 months following close, and return to its 2 to 2.5x target range over the medium term, including the assumed exercise of the options, while maintaining a BB category credit rating profile following close.AAR Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
67
Positive
Cash Flow
72
Positive
| Breakdown | TTM | May 2026 | May 2025 | May 2024 | May 2023 | May 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.49B | 3.31B | 2.78B | 2.32B | 1.99B | 1.82B |
| Gross Profit | 664.60M | 622.00M | 527.70M | 442.30M | 370.10M | 313.20M |
| EBITDA | 402.30M | 342.70M | 169.50M | 142.70M | 161.30M | 144.20M |
| Net Income | 193.40M | 187.70M | 12.50M | 46.30M | 90.20M | 78.70M |
Balance Sheet | ||||||
| Total Assets | 3.43B | 3.36B | 2.84B | 2.77B | 1.83B | 1.57B |
| Cash, Cash Equivalents and Short-Term Investments | 104.50M | 84.00M | 96.50M | 85.80M | 68.40M | 53.50M |
| Total Debt | 978.40M | 995.00M | 1.05B | 1.07B | 317.90M | 156.30M |
| Total Liabilities | 1.68B | 1.65B | 1.63B | 1.58B | 734.00M | 539.40M |
| Stockholders Equity | 1.74B | 1.70B | 1.21B | 1.19B | 1.10B | 1.03B |
Cash Flow | ||||||
| Free Cash Flow | 149.70M | 33.30M | 1.40M | 13.90M | -6.20M | 57.90M |
| Operating Cash Flow | 201.90M | 98.70M | 36.10M | 43.60M | 23.30M | 75.20M |
| Investing Cash Flow | -310.50M | -308.70M | 10.70M | -758.50M | -138.00M | -16.50M |
| Financing Cash Flow | 130.10M | 208.60M | -33.70M | 729.20M | 137.70M | -59.80M |
AAR Technical Analysis
Negative
138.58
Price Trends
118.02
Negative
126.17
Negative
118.41
Negative
Market Momentum
-5.57
Negative
31.76
Neutral
49.95
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AIR, the sentiment is Negative. The current price of 138.58 is above the 20-day moving average (MA) of 101.91, above the 50-day MA of 118.02, and above the 200-day MA of 118.41, indicating a bearish trend. The MACD of -5.57 indicates Negative momentum. The RSI at 31.76 is Neutral, neither overbought nor oversold. The STOCH value of 49.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AIR.
AAR Risk Analysis
AAR disclosed 22 risk factors in its most recent earnings report. AAR reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AAR Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $35.59B | 49.06 | 18.30% | 0.05% | 20.69% | 31.56% | |
72 Outperform | $4.86B | 24.28 | 4.44% | ― | 11.44% | 291.35% | |
70 Outperform | $4.00B | 20.21 | 11.63% | 1.67% | 21.97% | 515.59% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | $7.09B | 21.67 | 12.12% | ― | 12.56% | 144.85% | |
60 Neutral | $2.55B | -93.14 | -3.72% | 1.36% | 8.57% | -162.23% | |
57 Neutral | $4.39B | 55.88 | 3.73% | 0.26% | 23.35% | 56.45% |
* Industrials Sector Average
AIR
AAR
96.67
10.98
12.81%
DCO
Ducommun
160.05
60.17
60.24%
HEI
HEICO
300.02
-17.31
-5.45%
VSEC
VSE
148.15
-28.99
-16.36%
AMTM
Amentum Holdings, Inc.
21.29
-1.87
-8.07%
SARO
StandardAero, Inc.
21.72
-7.21
-24.92%
AAR Corporate Events
Business Operations and StrategyM&A TransactionsPrivate Placements and Financing
AAR Acquires Controlling Stake in MRO Holdings
Positive
Sep 29, 2026
On September 28, 2026, AAR agreed to acquire a 65% controlling stake in Panama-based MRO Holdings, a leading aircraft maintenance, repair and overhaul provider with about $1.0 billion in 2026 sales, 27% adjusted EBITDA margins and a network of hea...
Executive/Board ChangesShareholder Meetings
AAR Shareholders Back Board, Compensation and New Stock Plan
Positive
Sep 24, 2026
On September 23, 2026, AAR held its Annual Meeting, with approximately 93% of its 40,258,840 outstanding shares represented, signaling strong shareholder engagement in the company’s governance. Stockholders elected Class III directors John W...
Business Operations and StrategyExecutive/Board Changes
AAR Approves Special Long-Term Incentive Grant
Positive
Jul 24, 2026
On July 23, 2026, AAR’s Human Capital and Compensation Committee approved a special long-term performance incentive grant of 161,500 shares of performance-based restricted stock to Chairman and CEO John M. Holmes, with a targeted grant date ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.