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AAR
(NYSE:AIR)
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Rating:70Outperform
Price Target:
$147.00
▲(6.08% Upside)
Action:Upgraded
Date:08/18/26
AIR scores 70 mainly because fundamentals are improving but still constrained by cash conversion volatility, while technicals are supportive with a strong multi-timeframe uptrend and positive momentum. The latest earnings call adds confidence via strong growth/margin guidance and strategic progress, partially offset by integration and margin/cash-conversion execution risks. Valuation (P/E ~29.8 and no dividend yield provided) keeps the score from being higher.
Positive Factors
Broad revenue and earnings growth
Strong growth across commercial and government customers indicates expanding demand for AAR’s aviation services. Broad-based expansion reduces reliance on one market and supports operating leverage, while continued fleet utilization and MRO needs can sustain demand over the next several quarters.
Negative Factors
Weak and volatile cash conversion
Cash generation has improved but remains below management’s target and has varied materially across periods. Working-capital swings can limit internally funded investment, increase reliance on borrowing and weaken the quality of reported earnings.
Read all positive and negative factors
Positive Factors
Negative Factors
Broad revenue and earnings growth
Strong growth across commercial and government customers indicates expanding demand for AAR’s aviation services. Broad-based expansion reduces reliance on one market and supports operating leverage, while continued fleet utilization and MRO needs can sustain demand over the next several quarters.
Read all positive factors
AAR (AIR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.36B
Dividend YieldN/A
Average Volume (3M)525.98K
Price to Earnings (P/E)26.5
Beta (1Y)1.10
Revenue Growth18.97%
EPS Growth1317.49%
CountryUS
Employees7,100
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)4.88
Shares Outstanding40,258,840
10 Day Avg. Volume587,216
30 Day Avg. Volume525,982
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 Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$196.55Price Target Upside41.83% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)5.72
Revenue Forecast (FY)$3.65B
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 services and aviation parts/supply-chain solutions to airlines, defense customers, and government agencies. A key revenue stream comes from maintenance, repair and overhaul (MRO) work, where AAR is pai...
AAR Earnings Call Summary
Earnings Call Date:Jul 21, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Sep 29, 2026
Earnings Call Sentiment Positive
The call presented strong top-line growth, record quarterly and annual revenue, substantial increases in adjusted EBITDA and EPS, meaningful commercial distribution and software momentum, successful M&A and improving leverage and cash generation. Near-term margin pressure stemmed from acquisition integration (HAECO), a prior-year one-time gain comparison in used parts, USM margin compression, and reduced activity on a legacy government program (WASS). Management provided constructive FY27 guidance (ex-legacy) and clear plans to realize integration synergies and software scaling. Overall, the positives (broad revenue and profit growth, strategic wins, improving leverage and software upside) materially outweigh the near-term operational and integration headwinds.Positive Updates
Quarterly Revenue and Organic Growth
Total Q4 sales were a record $928 million, up 26% year-over-year, including 13% organic adjusted sales growth; commercial sales up 31% and government sales up 5%; commercial comprised 73% of Q4 sales.
Negative Updates
Margin Pressure from One-Time and Acquisition Effects
Parts supply adjusted EBITDA margin declined by ~250 basis points versus prior year due largely to a $6.5 million one-time gain in used parts in the prior-year quarter; HAECO Americas integration was slightly dilutive to near-term margins (impact fell from ~70 bps to ~40 bps quarter-over-quarter).
Read all updates
Q4-2026 Updates
Positive
Negative
Quarterly Revenue and Organic Growth
Total Q4 sales were a record $928 million, up 26% year-over-year, including 13% organic adjusted sales growth; commercial sales up 31% and government sales up 5%; commercial comprised 73% of Q4 sales.
Read all positive updates
Company Guidance
AAR guided Q1 FY‑2027 total sales growth (excluding the legacy commercial programs segment) of 21%–23% and Q1 adjusted EBITDA margin (ex‑legacy commercial programs) of 12.25%–12.75%; for full‑year FY‑2027 they expect total sales (ex‑legacy commercial programs) to increase in the low double‑digits to low teens, noted the legacy commercial programs business should wind down ratably over the next 3–4 years, and said the HAECO Americas acquisition should reach margins consistent with other airframe MRO sites in 2H FY‑2027 — all while supporting the multi‑year revenue growth targets discussed at Investor Day and continuing to push operating cash conversion toward a long‑term target of 30%+ of adjusted EBITDA.AAR Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
63
Positive
Cash Flow
55
Neutral
| Breakdown | May 2026 | May 2025 | May 2024 | May 2023 | May 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.31B | 2.78B | 2.32B | 1.99B | 1.82B |
| Gross Profit | 622.00M | 527.70M | 442.30M | 370.10M | 313.20M |
| EBITDA | 345.90M | 169.50M | 142.70M | 161.30M | 144.20M |
| Net Income | 187.70M | 12.50M | 46.30M | 90.20M | 78.70M |
Balance Sheet | |||||
| Total Assets | 3.36B | 2.84B | 2.77B | 1.83B | 1.57B |
| Cash, Cash Equivalents and Short-Term Investments | 84.00M | 96.50M | 85.80M | 68.40M | 53.50M |
| Total Debt | 995.00M | 1.05B | 1.07B | 317.90M | 156.30M |
| Total Liabilities | 1.65B | 1.63B | 1.58B | 734.00M | 539.40M |
| Stockholders Equity | 1.70B | 1.21B | 1.19B | 1.10B | 1.03B |
Cash Flow | |||||
| Free Cash Flow | 33.30M | 1.40M | 13.90M | -6.20M | 57.90M |
| Operating Cash Flow | 98.70M | 36.10M | 43.60M | 23.30M | 75.20M |
| Investing Cash Flow | -308.70M | 10.70M | -758.50M | -138.00M | -16.50M |
| Financing Cash Flow | 208.60M | -33.70M | 729.20M | 137.70M | -59.80M |
AAR Technical Analysis
Neutral
138.58
Price Trends
138.60
Negative
127.15
Positive
113.20
Positive
Market Momentum
-1.45
Positive
40.21
Neutral
11.80
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AIR, the sentiment is Neutral. The current price of 138.58 is below the 20-day moving average (MA) of 141.34, below the 50-day MA of 138.60, and above the 200-day MA of 113.20, indicating a neutral trend. The MACD of -1.45 indicates Positive momentum. The RSI at 40.21 is Neutral, neither overbought nor oversold. The STOCH value of 11.80 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 | $39.72B | 54.47 | 18.30% | 0.04% | 20.69% | 31.56% | |
72 Outperform | $4.97B | 24.08 | 4.44% | ― | 11.44% | 291.35% | |
70 Outperform | $5.36B | 26.49 | 12.19% | ― | 18.97% | 1317.49% | |
66 Neutral | $8.28B | 24.74 | 12.12% | ― | 12.56% | 144.85% | |
65 Neutral | $6.06B | 75.88 | 3.73% | 0.20% | 23.35% | 56.45% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
60 Neutral | $2.66B | -94.71 | -3.72% | ― | 8.57% | -162.23% |
* Industrials Sector Average
AIR
AAR
129.29
52.92
69.29%
DCO
Ducommun
171.42
80.47
88.48%
HEI
HEICO
331.15
19.36
6.21%
VSEC
VSE
208.68
46.61
28.76%
AMTM
Amentum Holdings, Inc.
19.99
-4.99
-19.98%
SARO
StandardAero, Inc.
24.49
-2.18
-8.17%
AAR Corporate Events
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.