AAR (AIR) AI Stock Analysis

• Market Cap: $2.48B
• Dividend Yield: N/A
• Average Volume (3M): 215.85K
• Price to Earnings (P/E): 246.8
• Beta (1Y): 1.04
• Revenue Growth: 21.07%
• EPS Growth: -120.95%
• Country: US
• Employees: 5,700
• Sector: Industrials
• Sector Strength: 85
• Industry: Aerospace & Defense
• EPS (TTM): 0.99
• Shares Outstanding: 36,103,800
• 10 Day Avg. Volume: 268,142
• 30 Day Avg. Volume: 215,854
• PEG Ratio: 1.14
• Price to Book (P/B): 1.58
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -280.45
• Enterprise Value/Market Cap: 0.80
• Enterprise Value/Revenue: 0.20
• Enterprise Value/Gross Profit: 3.94
• Enterprise Value/Ebitda: 3.04
• 1Y Price Target: $79.33
• Price Target Upside: 15.59% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 74 Outperform
• Price Target: $77.00 ▲(12.20%Upside)

AAR Corp's stock score is primarily driven by strong technical indicators and positive earnings call sentiment, reflecting robust market momentum and promising future guidance. However, financial performance is impacted by declining net income and cash flow, and valuation concerns due to a negative P/E ratio and lack of dividends slightly offset the score. Strategic corporate events provide a positive outlook but have minimal immediate impact.

Positive Factors

Margin Expansion

Margin expansion is expected to continue, driven by growth in new parts distribution, Trax software wins, and product support synergies.

Organic Growth

New parts distribution has performed exceptionally well with more than 20% organic growth over the past several quarters.

Partnerships

Trax has a new partnership with Virgin Atlantic and has also announced partnerships in the past with Singapore Airlines, Cathay Pacific, and WestJet, among others.

Negative Factors

Engine Inductions

The soft engine inductions from one customer are expected to reverse later, impacting current performance.

Revenue Performance

Revenue was below consensus on 6% organic growth.

Top-line Performance

The top-line was below expectations due to engine induction timing from one customer, noted as an idiosyncratic issue.

AAR Business Overview & Revenue Model

Company Description

AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide. The Aviation Services segment offers aftermarket support and services; inventory management and distribution services; and maintenance, repair, and overhaul, as well as engineering services. This segment also sells and leases new, overhauled, and repaired engine and airframe parts, and components; and provides inventory and repair programs, warranty claim management, and outsourcing programs for engine and airframe parts and components, as well as performance-based supply chain logistics programs in support of the U.S. department of defense and foreign governments. In addition, it offers airframe inspection, maintenance, repair and overhaul, painting, line maintenance, airframe modification, structural repair, avionic and installation, exterior and interior refurbishment, and engineering and support services; and repairs and overhauls components, landing gears, wheels, and brakes. The Expeditionary Services segment provides products and services supporting the movement of equipment and personnel by the U.S. and foreign governments, and non-governmental organizations. This segment also designs, manufactures, and repairs transportation pallets, and various containers and shelters; and provides engineering, design, and system integration services for command and control systems. The company serves domestic and foreign passenger airlines; domestic and foreign cargo airlines; regional and commuter airlines; business and general aviation operators; original equipment manufacturers; aircraft leasing companies; aftermarket aviation support companies; and domestic and foreign military customers. It primarily markets and sells products and services through its employees and foreign sales representatives. AAR Corp. was founded in 1951 and is headquartered in Wood Dale, Illinois.

How the Company Makes Money

AAR Corp generates revenue primarily through its Aviation Services segment, which includes providing maintenance, repair and overhaul (MRO) services for various aircraft components and systems. The company also earns income from inventory management and supply chain solutions, where it manages and supplies parts and equipment for commercial airlines, defense agencies, and other aviation customers. Additionally, AAR has strategic partnerships with key industry players and government contracts that significantly contribute to its revenue streams. These partnerships and contracts enable AAR to offer a wide array of services and solutions that cater to the specific needs of its diverse client base, thereby ensuring steady revenue growth.

AAR Financial Statement Overview

Summary

AAR Corp showcases robust revenue growth and stable operational performance, as evidenced by strong income statement metrics. However, financial health is challenged by a decline in net income, negative cash flow, and increasing debt levels, which could pose potential risks if not addressed.

Income Statement

The company has shown a strong revenue growth trend, especially in the TTM period with a significant increase in total revenue. However, there is a concerning drop in net income leading to a negative net profit margin in the TTM. The gross profit margin has remained stable, which is a positive sign for operational efficiency. EBIT and EBITDA margins are consistent, indicating steady operating performance despite the recent net income loss.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio, indicating a balanced approach to leveraging. The equity ratio is healthy, showing a strong equity base in relation to total assets. However, the increase in total debt over recent periods could pose a risk if not managed properly. The return on equity has declined due to the impact on net income, which needs to be monitored closely.

Cash Flow

Operating cash flow has decreased significantly in the TTM, impacting the company's ability to generate cash from operations. The free cash flow turned negative, which is a concern for future investments and dividend payments. The company needs to improve its cash generation efficiency to avoid liquidity issues.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
2.68B	2.32B	1.99B	1.82B	1.65B	2.07B
	Gross Profit
504.80M	442.30M	370.10M	313.20M	275.90M	269.20M
	EBIT
156.60M	129.20M	133.90M	106.90M	85.20M	41.30M
	EBITDA
135.40M	142.70M	161.30M	144.20M	73.10M	87.40M
	Net Income Common Stockholders
-12.40M	46.30M	90.20M	78.70M	35.80M	24.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
84.40M	85.80M	68.40M	53.50M	51.80M	404.70M
	Total Assets
2.86B	2.77B	1.83B	1.57B	1.54B	2.08B
	Total Debt
1.09B	1.07B	317.90M	156.30M	193.60M	670.90M
	Net Debt
1.01B	979.90M	249.50M	102.80M	141.80M	266.20M
	Total Liabilities
1.68B	1.58B	734.00M	539.40M	565.30M	1.18B
	Stockholders Equity
1.18B	1.19B	1.10B	1.03B	974.40M	902.60M
Cash Flow		Free Cash Flow
-6.00M	13.90M	-6.20M	57.90M	93.90M	-59.70M
	Operating Cash Flow
10.00M	43.60M	23.30M	75.20M	105.20M	-36.10M
	Investing Cash Flow
-735.40M	-758.50M	-138.00M	-16.50M	-500.00K	-24.80M
	Financing Cash Flow
755.90M	729.20M	137.70M	-59.80M	-469.50M	444.50M

AAR Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 68.63
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AIR, the sentiment is Positive. The current price of 68.63 is above the 20-day moving average (MA) of 64.09, above the 50-day MA of 58.55, and above the 200-day MA of 63.55, indicating a bullish trend. The MACD of 2.54 indicates Negative momentum. The RSI at 75.19 is Negative, neither overbought nor oversold. The STOCH value of 91.84 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AIR.

AAR Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
POWL	80 Outperform	$2.27B	13.21	37.08%	0.57%	27.43%	67.93%
AIR	74 Outperform	$2.48B	246.75	-1.08%	―	21.07%	-120.95%
ALG	70 Neutral	$2.57B	22.13	11.48%	0.56%	-6.43%	-14.68%
SXI	66 Neutral	$1.84B	30.17	9.29%	0.84%	2.67%	-18.41%
Sector *	66 Neutral	$4.47B	12.21	5.40%	3.65%	4.14%	-12.00%
ENR	58 Neutral	$1.50B	28.28	33.46%	5.79%	0.39%	-37.01%
TGI	54 Neutral	$2.01B	56.43	46.74%	―	-8.59%	―

AAR Corporate Events

AAR Corp to Present Strategic Focus at Investor Meeting

AAR CORP. announced its management will present at an investor meeting on May 28, 2025, highlighting its strategic focus on core aviation services and improved margins since 2019. The company has restructured non-core businesses, completed acquisitions, and expanded its portfolio, positioning itself for growth in the aviation aftermarket industry. This transformation is expected to enhance AAR’s market positioning and offer significant benefits to stakeholders.

The most recent analyst rating on (AIR) stock is a Buy with a $85.00 price target. To see the full list of analyst forecasts on AAR stock, see the AIR Stock Forecast page.

AAR Corp Reports Strong Q3 FY25 Financial Performance

During the fourth quarter of fiscal 2025, AAR CORP. management will present at multiple investor meetings, showcasing their continued growth and strategic initiatives. The company has reported significant financial performance with a 21% increase in sales and a 13.4% adjusted EBITDA margin for Q3 FY25. AAR CORP. highlights include the near completion of the Product Support acquisition integration, ongoing hangar expansions, and strong momentum in their Trax software business, indicating robust growth and opportunities for cost savings, particularly for the U.S. Government.

AAR Corp. Sells Landing Gear Overhaul Business

On April 3, 2025, AAR CORP. completed the sale of its Landing Gear Overhaul business to GA Telesis for $51 million, receiving net proceeds of approximately $48 million. This divestiture is part of AAR’s strategic plan to focus on core aviation aftermarket services, aiming to enhance its portfolio and accelerate growth and margin expansion initiatives.

AAR Expands Board with Hema Widhani Appointment

On March 18, 2025, AAR CORP. announced the election of Hema Widhani to its Board of Directors, expanding the board from 11 to 12 members. Ms. Widhani, who has over 20 years of experience in digital, marketing, and customer experience, currently serves as the Chief Digital and Marketing Officer at Prudential Financial. Her expertise in digital transformation and AI initiatives is expected to contribute to AAR’s growth strategy and enhance its industry positioning.