AAR (AIR) AI Stock Analysis

• Market Cap: $2.59B
• Dividend Yield: N/A
• Average Volume (3M): 265.55K
• 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: 89
• Industry: Aerospace & Defense
• EPS (TTM): 0.99
• Shares Outstanding: 36,103,800
• 10 Day Avg. Volume: 262,414
• 30 Day Avg. Volume: 265,546
• 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: 0.77
• Enterprise Value/Revenue: 0.20
• Enterprise Value/Gross Profit: 3.94
• Enterprise Value/Ebitda: 3.04
• 1Y Price Target: $77.33
• Price Target Upside: 3.73% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 74 Outperform
• Price Target: $77.00 ▲(3.29%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

Financial Performance

AAR reported EBITDA above estimates on impressive margin expansion.

Margin Expansion

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

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

Customer Issue

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

Performance Challenges

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

Revenue

Revenue was below consensus on 6% organic growth.

AAR Business Overview & Revenue Model

Company Description

AAR Corp (AIR) is a global provider of aviation services to commercial and government customers. It operates through various segments, including Aviation Services and Expeditionary Services, offering a comprehensive range of products such as aircraft maintenance, repair and overhaul (MRO), inventory management, and supply chain solutions. AAR is known for its expertise in aviation logistics and its capability to deliver integrated solutions that enhance the operational efficiency and readiness of its clients.

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
EBITDA	135.40M	142.70M	161.30M	144.20M	73.10M	87.40M
Net Income	-12.40M	46.30M	90.20M	78.70M	35.80M	24.80M
Balance Sheet
Total Assets	2.86B	2.77B	1.83B	1.57B	1.54B	2.08B
Cash, Cash Equivalents and Short-Term Investments	84.40M	85.80M	68.40M	53.50M	51.80M	404.70M
Total Debt	1.09B	1.07B	317.90M	156.30M	193.60M	670.90M
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: 74.55
• 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 74.55 is above the 20-day moving average (MA) of 69.38, above the 50-day MA of 64.46, and above the 200-day MA of 63.86, indicating a bullish trend. The MACD of 2.34 indicates Negative momentum. The RSI at 77.77 is Negative, neither overbought nor oversold. The STOCH value of 92.34 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	78 Outperform	$2.56B	14.96	37.08%	0.50%	27.43%	67.93%
AIR	74 Outperform	$2.59B	246.75	-1.08%	―	21.07%	-120.95%
ALG	72 Outperform	$2.71B	23.34	11.48%	0.54%	-6.43%	-14.68%
Sector *	71 Outperform	¥255.13B	13.43	8.49%	3.04%	6.31%	12.97%
SXI	69 Neutral	$1.98B	32.45	9.29%	0.76%	2.67%	-18.41%
ENR	59 Neutral	$1.60B	31.05	33.46%	5.42%	0.39%	-37.01%
TGI	55 Neutral	$2.01B	56.65	46.74%	―	-4.74%	―

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.