AAR Corp. (AIR)
NYSE:AIR
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AAR
(NYSE:AIR)
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Rating:68Neutral
Price Target:
$129.00
▲(20.28% Upside)
Action:DowngradedDate:03/26/26
The score is driven by improving fundamentals and a constructive earnings outlook (raised guidance and expected cash-flow positivity), supported by a strong price uptrend. The main constraint is cash-flow consistency versus earnings and near-term margin pressure from integration and facility transitions, while valuation appears reasonable at ~16x earnings but without dividend support.
Positive Factors
Parts distribution strength
Sustained, high-single-digit-to-double-digit growth in parts distribution and a large EBITDA expansion indicate durable aftermarket demand and scale advantages. A stronger parts franchise generates recurring, flight-driven revenue, improves segment margins, and anchors cash flows over the medium term.
Negative Factors
Weak cash conversion
Free cash flow is positive but inconsistent: FCF covers portions of net income yet has fallen sharply versus prior periods and operating cash lags reported earnings. Weak cash conversion constrains discretionary capital allocation, debt reduction, and limits cushioning during downturns.
Read all positive and negative factors
Positive Factors
Negative Factors
Parts distribution strength
Sustained, high-single-digit-to-double-digit growth in parts distribution and a large EBITDA expansion indicate durable aftermarket demand and scale advantages. A stronger parts franchise generates recurring, flight-driven revenue, improves segment margins, and anchors cash flows over the medium term.
Read all positive factors
AAR (AIR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.26B
Dividend YieldN/A
Average Volume (3M)484.11K
Price to Earnings (P/E)16.3
Beta (1Y)1.15
Revenue Growth17.59%
EPS Growth-56.15%
CountryUS
Employees5,700
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)1.25
Shares Outstanding39,764,267
10 Day Avg. Volume746,457
30 Day Avg. Volume484,114
Financial Highlights & Ratios
PEG Ratio-2.39
Price to Book (P/B)1.80
Price to Sales (P/S)0.79
P/FCF Ratio1.56K
Enterprise Value/Market Cap1.20
Enterprise Value/Revenue1.63
Enterprise Value/Gross Profit8.60
Enterprise Value/Ebitda15.55
Forecast
1Y Price Target
$122.80Price Target Upside14.50% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)4.71
Revenue Forecast (FY)$3.21B
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, rep...
How the Company Makes Money
AAR primarily makes money by selling aviation aftermarket services and products under multi-year contracts and recurring, flight-driven demand from operators.
Key revenue streams include:
1) Maintenance, Repair & Overhaul (MRO) services: AAR earn...
AAR Earnings Call Summary
Earnings Call Date:Mar 24, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jul 21, 2026
Earnings Call Sentiment Positive
The call emphasized strong, broad-based revenue and profitability growth driven by parts distribution, favorable government demand, accretive M&A (ADI), and Trax software momentum. Near-term lowlights center on margin dilution and operational work required from the HAECO Americas integration, plus facility transitions and geopolitical uncertainty. Management provided improved guidance and clear timelines for integration-driven margin recovery, and cash flow/leverage metrics remained strong.Positive Updates
Strong Top-Line Growth
Total sales grew 25% year-over-year to $845 million, including 14% organic adjusted sales growth. Q3 results drove full-year sales growth guidance to approximately 19% with organic sales growth expected around 12%.
Negative Updates
HAECO Americas Integration Headwinds and Margin Dilution
HAECO Americas acquisition caused short-term margin pressure in Repair & Engineering. The quarter recorded actions to rightsizing and a bargain purchase accounting gain (excluded from adjusted results), and management noted this was the most critical integration quarter.
Read all updates
Q3-2026 Updates
Positive
Negative
Strong Top-Line Growth
Total sales grew 25% year-over-year to $845 million, including 14% organic adjusted sales growth. Q3 results drove full-year sales growth guidance to approximately 19% with organic sales growth expected around 12%.
Read all positive updates
Company Guidance
AAR guided Q4 total adjusted sales growth of 19–21% with organic adjusted sales growth of 6–8% (excluding the landing‑gear divestiture and fiscal‑2026 acquisitions) and an expected Q4 operating margin of 10.2–10.5%; for the full year management now expects roughly 19% total sales growth and about 12% organic sales growth (an upward revision), said net leverage remains targeted at 2.0x–2.5x (Q3 closed at 2.17x net debt/adjusted EBITDA), and the company expects to be cash‑flow positive in Q4 and for the full fiscal year.AAR Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
63
Positive
Cash Flow
46
Neutral
| Breakdown | TTM | May 2025 | May 2024 | May 2023 | May 2022 | May 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.13B | 2.78B | 2.32B | 1.99B | 1.82B | 1.65B |
| Gross Profit | 595.50M | 527.70M | 442.30M | 370.10M | 313.20M | 275.90M |
| EBITDA | 329.60M | 169.50M | 142.70M | 161.30M | 144.20M | 73.10M |
| Net Income | 171.00M | 12.50M | 46.30M | 90.20M | 78.70M | 35.80M |
Balance Sheet | ||||||
| Total Assets | 3.33B | 2.84B | 2.77B | 1.83B | 1.57B | 1.54B |
| Cash, Cash Equivalents and Short-Term Investments | 100.10M | 96.50M | 85.80M | 68.40M | 53.50M | 51.80M |
| Total Debt | 979.70M | 1.05B | 1.07B | 317.90M | 156.30M | 193.60M |
| Total Liabilities | 1.69B | 1.63B | 1.58B | 734.00M | 539.40M | 565.30M |
| Stockholders Equity | 1.64B | 1.21B | 1.19B | 1.10B | 1.03B | 974.40M |
Cash Flow | ||||||
| Free Cash Flow | 84.80M | 1.40M | 13.90M | -6.20M | 57.90M | 93.90M |
| Operating Cash Flow | 94.80M | 36.10M | 43.60M | 23.30M | 75.20M | 105.20M |
| Investing Cash Flow | -224.20M | 10.70M | -758.50M | -138.00M | -16.50M | -500.00K |
| Financing Cash Flow | 128.60M | -33.70M | 729.20M | 137.70M | -59.80M | -469.50M |
AAR Technical Analysis
Negative
107.25
Price Trends
110.16
Negative
97.27
Positive
87.01
Positive
Market Momentum
-0.31
Negative
47.76
Neutral
52.20
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 107.25 is below the 20-day moving average (MA) of 109.32, below the 50-day MA of 110.16, and above the 200-day MA of 87.01, indicating a neutral trend. The MACD of -0.31 indicates Negative momentum. The RSI at 47.76 is Neutral, neither overbought nor oversold. The STOCH value of 52.20 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 23 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 |
|---|---|---|---|---|---|---|---|
68 Neutral | $4.26B | 16.28 | 12.07% | ― | 17.59% | -56.15% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | $1.81B | -41.88 | -5.01% | ― | 3.16% | -213.56% | |
55 Neutral | $4.29B | -73.03 | -2.08% | ― | 8.63% | 72.72% | |
51 Neutral | $4.78B | 72.43 | 2.24% | 0.22% | 9.22% | 65.05% |
* Industrials Sector Average
AIR
AAR
107.25
51.26
91.55%
DCO
Ducommun
120.78
62.75
108.13%
MRCY
Mercury Systems
71.40
28.31
65.70%
VSEC
VSE
170.89
51.23
42.82%
AAR Corporate Events
Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
AAR Names Dylan Wolin Chief Financial Officer
Positive
Feb 11, 2026
On February 9, 2026, AAR CORP. appointed Dylan Wolin as Senior Vice President and Chief Financial Officer, effective February 23, 2026, giving him oversight of finance, accounting, tax, treasury, investor relations, and corporate development. Inte...
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.