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Loar Holdings Inc. (LOAR)
NYSE:LOAR
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Loar Holdings Inc.
(NYSE:LOAR)
73Outperform
Positive Factors
Financial Performance
Loar Holdings Inc. reported a solid Q1 with 11% organic growth and operating profit up 22%, driven by strong performance in the Defense sector and expanding EBITDA margins.
Stock Upgrade
Analyst upgrades LOAR to Overweight from Equal-weight due to strong execution following its IPO.
Stock Valuation
The $110 price target incorporates significant organic and inorganic EBITDA expansion, reflecting a 75% premium to compounder peers, indicating strong growth potential.
Strategic Growth
Loar Holdings Inc. has ample capacity for mergers and acquisitions, with PF net leverage of 3.2X, providing room for further strategic growth.
Negative Factors
Stock Performance
The recent underperformance of LOAR's stock provides an attractive entry point for investors.
Tax Expenses
Tax expenses were $4mn, representing a 28.6% tax rate, which was above MSe of $3mm (37.7% tax rate) and above consensus of $1mm (12.8% tax rate).
Loar Holdings Inc. (LOAR) vs. S&P 500 (SPY)
Market Cap
$8.01B
Dividend YieldN/A
Average Volume (3M)1.21M
Price to Earnings (P/E)224.6
Beta (1Y)1.15
Revenue Growth27.03%
EPS Growth562.31%
CountryUS
Employees1,500
SectorGeneral
Sector StrengthN/A
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.20
Shares Outstanding93,556,070
10 Day Avg. Volume2,000,718
30 Day Avg. Volume1,213,776
Financial Highlights & Ratios
PEG Ratio15.62
Price to Book (P/B)7.98
Price to Sales (P/S)0.00
P/FCF Ratio201.92
Enterprise Value/Market Cap1.15
Enterprise Value/Revenue7.45
Enterprise Value/Gross Profit46.28
Enterprise Value/Ebitda22.72
Forecast
1Y Price Target
$98.00Price Target Upside14.50% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Loar Holdings Inc. Business Overview & Revenue Model
Company DescriptionLoar Holdings, Inc. engages in the design, manufacture, and sale of niche aerospace and defense components for aircraft, aerospace and defense systems. The company was founded on August 21, 2017 and is headquartered in White Plains, NY.
How the Company Makes MoneyLoar Holdings Inc. generates revenue primarily through the operations of its subsidiaries, each contributing through sales of specialized products and services in their respective industries. In the aerospace sector, the company earns money by supplying aircraft components and systems to major aerospace manufacturers and defense contractors. Revenue is also derived from long-term contracts and partnerships with governments and corporations for defense-related products. Additionally, Loar Holdings benefits from its industrial manufacturing units, which produce and sell machinery, tools, and equipment to various commercial sectors. Strategic acquisitions and investments in high-growth potential companies further contribute to its earnings by expanding market reach and enhancing operational synergies.
Loar Holdings Inc. Financial Statement Overview
Summary
Loar Holdings Inc. shows strong financial performance with significant revenue growth, improved profitability, and a robust balance sheet. The company has minimal debt and strong cash flow generation, though there is room for further optimization and improvement in return on equity and profitability margins.Income Statement
Loar Holdings Inc. has demonstrated strong revenue growth with a significant 26.9% increase from 2023 to 2024, indicating a positive trajectory. The gross profit margin improved to 49.36%, reflecting efficient cost management. The net profit margin turned positive at 5.52% after a loss in 2023, showing improved profitability. However, the EBIT and EBITDA margins, both at 21.75% for 2024, while healthy, have room for improvement compared to industry leaders.78
Positive
Balance Sheet
The company has a solid balance sheet with a low debt-to-equity ratio of 0.0084, indicating minimal leverage risk. The return on equity improved to 2.04%, suggesting better utilization of shareholder funds. A robust equity ratio of 75.05% underscores strong financial stability. However, further improvement in ROE is desirable to enhance shareholder value.82
Very Positive
Cash Flow
Loar Holdings Inc. experienced substantial free cash flow growth, increasing free cash flow to $46.1 million in 2024, a notable improvement from 2023. The operating cash flow to net income ratio is robust at 2.47, indicating efficient cash generation. However, the free cash flow to net income ratio is slightly weaker at 2.07, suggesting potential areas for optimization in cash utilization.75
Positive
| Breakdown | ||
| Dec 2024 | Dec 2023 | Dec 2022 |
|---|---|---|
| Income Statement | Total Revenue | |
| 402.82M | 317.48M | 239.43M | Gross Profit |
| 198.82M | 154.26M | 111.50M | EBIT |
| 87.63M | 69.49M | 39.46M | EBITDA |
| 124.24M | 107.52M | 81.69M | Net Income Common Stockholders |
| 22.23M | -4.62M | -2.47M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |
| 54.07M | 21.49M | 35.50M | Total Assets |
| 1.45B | 1.05B | 994.52M | Total Debt |
| 286.43M | 545.48M | 496.44M | Net Debt |
| 232.37M | 523.99M | 460.95M | Total Liabilities |
| 362.11M | 632.30M | 572.55M | Stockholders Equity |
| 1.09B | 418.14M | 421.97M |
| Cash Flow | Free Cash Flow | |
| 46.10M | 679.00K | 5.34M | Operating Cash Flow |
| 54.97M | 12.81M | 13.27M | Investing Cash Flow |
| -392.13M | -72.56M | -181.83M | Financing Cash Flow |
| 370.02M | 45.72M | 135.31M |
Loar Holdings Inc. Technical Analysis
Neutral
85.59
Price Trends
80.68
Positive
77.56
Positive
77.64
Positive
Market Momentum
1.27
Positive
44.60
Neutral
18.47
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LOAR, the sentiment is Neutral. The current price of 85.59 is below the 20-day moving average (MA) of 92.41, above the 50-day MA of 80.68, and above the 200-day MA of 77.64, indicating a neutral trend. The MACD of 1.27 indicates Positive momentum. The RSI at 44.60 is Neutral, neither overbought nor oversold. The STOCH value of 18.47 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LOAR.
Loar Holdings Inc. Peers Comparison
Overall Rating
UnderperformOutperform
Sector (56)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $8.92B | 22.51 | 13.36% | ― | 22.29% | 51.90% | |
76 Outperform | $10.02B | 34.87 | 28.24% | 0.88% | 9.87% | 14.16% | |
73 Outperform | $8.01B | 224.65 | 4.62% | ― | 27.03% | 562.31% | |
72 Outperform | $5.81B | 28.55 | 11.61% | 0.61% | 4.50% | 9.90% | |
68 Neutral | $10.02B | 142.15 | ― | 16.92% | ― | ||
56 Neutral | $4.77B | 21.15 | -17.84% | 5.09% | 14.68% | -14.65% | |
37 Underperform | $4.44B | ― | 81.63% | ― | -2.91% | -109.95% |
* General Sector Average
Performance Comparison
LOAR
Loar Holdings Inc.
84.94
33.39
64.77%
ERJ
Embraer SA
49.98
19.50
63.98%
MOG.A
Moog
188.83
15.90
9.19%
SPR
Spirit AeroSystems
37.60
6.59
21.25%
BWXT
BWX Technologies
109.99
22.31
25.44%
SARO
StandardAero, Inc.
29.93
-3.04
-9.22%
Loar Holdings Inc. Earnings Call Summary
Earnings Call Date:May 13, 2025
(Q1-2025)
| % Change Since: -13.97%|
Next Earnings Date:Aug 19, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, including record sales and growth across key segments, improved margins, and a positive outlook for 2025. The development of a new product in partnership with Airbus further emphasizes Loar's innovative capabilities. While there are some concerns about potential supply chain and tariff issues, these have not yet significantly impacted results.Q1-2025 Updates
Positive Updates
Record Sales and Growth
Loar Holdings achieved record sales during Q1 2025, with total sales increasing to $150 million, a 12% increase compared to the prior year period.
Commercial Aftermarket and Defense Sales Surge
Commercial aftermarket sales saw an increase of 13% in Q1 2025, up 15% sequentially from Q4 2024, while defense sales increased by 30%.
Improved Margins
Gross profit margin for Q1 2025 increased by 370 basis points compared to the prior year period. Adjusted EBITDA margins were strong at 37.6%.
Strong Financial Outlook for 2025
Loar Holdings updated their guidance, expecting net sales between $482 million and $490 million, and adjusted EBITDA between $182 million and $185 million.
New Product Launch: Secondary Cockpit Barrier
Loar successfully developed a secondary cockpit barrier in partnership with Airbus, meeting FAA safety requirements, with production units already shipped.
Negative Updates
Potential Supply Chain and Tariff Concerns
Although not significantly impacting current results, there are concerns about future impacts from tariffs and supply chain noise.
Company Guidance
During the Loar Holdings First Quarter 2025 Results Conference Call, the company provided updated guidance and shared key financial metrics, reflecting their strong performance and future outlook. Loar Holdings raised its full-year 2025 guidance, now expecting net sales between $482 million and $490 million, adjusted EBITDA between $182 million and $185 million, and adjusted EBITDA margin of approximately 37.5%, which signifies a 120 basis point improvement over 2024. The company reported record sales of $150 million for Q1 2025, a 12% increase compared to the prior year, driven by strong performances in the defense, commercial aftermarket, and commercial OEM sectors. Loar achieved a gross profit margin increase of 370 basis points year-over-year, with net organic sales up 11.1%. The company registered an increase in net income of $13 million, primarily due to higher operating income and lower interest costs. Loar also highlighted their strategic value drivers, including launching new products and improving productivity, as key contributors to their robust financial performance. Additionally, they expect capital expenditures of approximately $14 million, interest expenses of around $28 million, and a fully diluted share count of approximately 97 million shares for the year.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.