AAR (AIR) AI Stock Analysis

• Market Cap: $3.75B
• Dividend Yield: N/A
• Average Volume (3M): 458.13K
• Price to Earnings (P/E): 36.9
• Beta (1Y): 1.11
• Revenue Growth: 17.59%
• EPS Growth: -56.15%
• Country: US
• Employees: 5,700
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 1.18
• Shares Outstanding: 39,572,510
• 10 Day Avg. Volume: 675,093
• 30 Day Avg. Volume: 458,129
• PEG Ratio: -2.39
• Price to Book (P/B): 1.80
• Price to Sales (P/S): 0.79
• P/FCF Ratio: 1.56K
• Enterprise Value/Market Cap: 1.06
• Enterprise Value/Revenue: 1.34
• Enterprise Value/Gross Profit: 6.94
• Enterprise Value/Ebitda: 15.03
• 1Y Price Target: $101.25
• Price Target Upside: 6.88% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 4.46
• Revenue Forecast (FY): $3.17B

• Rating: 60 Neutral
• Price Target: $94.00 ▼(-0.77% Downside)

The score is held back primarily by weak cash flow and thin net profitability alongside higher leverage, despite solid technical uptrend signals and a constructive earnings outlook. Valuation is also a constraint given the elevated P/E, while recent acquisitions add a modest positive offset.

Positive Factors

Parts-supply growth and exclusive distribution

Sustained high growth and above-segment margins in Parts Supply reflect durable demand and scale advantages. The exclusive distribution model and market-share gains create recurring revenue, higher margin mix, and a structural aftermarket foothold that supports earnings resilience over multiple quarters.

Strategic MRO acquisitions expanding footprint

The HAECO Americas acquisition materially expands heavy maintenance capacity and locks in large multi-year customer contracts. This increases utilization headroom, strengthens North American MRO scale, and should generate more predictable, contract-backed revenue and margin upside as synergies are realized.

Trax/Aerostrat software wins and digital offerings

Enterprise software wins deepen recurring, high-margin service streams and differentiate AAR from pure MRO peers. Digital MRO products improve customer stickiness, create cross-sell opportunities, and support higher lifetime client value, offering durable revenue diversification and margin leverage.

Negative Factors

Weak cash generation and negative free cash flow

Near-zero operating cash and negative free cash flow limit internal funding for inventory, capex, and integration of acquisitions. Persistently weak cash conversion raises reliance on external financing and constrains capital allocation flexibility, a structural headwind until conversion improves.

Increased leverage and reduced balance-sheet flexibility

Higher debt levels and stepped-up leverage reduce financial flexibility to withstand demand shocks or fund opportunistic investments. Elevated leverage increases interest and covenant risk, making the company more sensitive to cash-flow variability and constraining long-term strategic optionality.

Thin net margins and low return on equity

Very thin net profitability and low ROE imply limited earnings cushion and modest capital efficiency. Small margin deterioration or higher below-the-line costs could quickly erode earnings, making sustainable shareholder returns dependent on sustained margin expansion or meaningful volume-driven leverage.

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 generates revenue through multiple key streams including aircraft maintenance services, which encompass repair, overhaul, and modification of aircraft for commercial airlines and military operators. Additionally, the company profits from its supply chain management services, which offer logistics and inventory management solutions to clients. AAR's sales of spare parts and components also contribute significantly to its revenue, with contracts established with various airlines and military branches. Strategic partnerships with major defense contractors and government agencies enhance its revenue potential, as does its ability to secure long-term contracts with customers in both the civilian and military sectors.

AAR Financial Statement Overview

Summary

Revenue is still growing (TTM +3.8%) but profitability is mixed with very thin net margin (~1.0%). Balance-sheet leverage has risen (debt-to-equity ~0.88) and ROE is modest (~2.4%). Cash generation is the key weakness: operating cash flow is near breakeven and free cash flow is negative (TTM -$15.8M), indicating weak cash conversion.

Income Statement

TTM (Trailing-Twelve-Months) revenue grew 3.8%, extending a multi-year expansion from 2021–2025, but the growth rate has clearly cooled versus the prior years. Profitability is mixed: gross margin is steady near ~19%, and EBIT margin is moderate (~4.8%), yet net margin is very thin (~1.0%) and well below earlier years, indicating higher below-the-line costs and/or margin pressure. Net income improved versus FY2025, but earnings quality remains a key watch item given the low net margin.

Balance Sheet

Leverage has stepped up materially: debt-to-equity moved from low levels in 2021–2022 to ~0.88 in FY2024–TTM, reducing balance-sheet flexibility. Equity has grown (supporting a larger asset base), but returns are currently modest, with return on equity ~2.4% in TTM (and ~1.0% in FY2025), well below 2022–2023 levels. Overall, the balance sheet is serviceable, but the higher debt load and weaker returns temper the profile.

Cash Flow

TTM (Trailing-Twelve-Months) cash generation is weak: operating cash flow is near breakeven ($1.4M) and free cash flow is negative (-$15.8M), a sharp deterioration from positive free cash flow in FY2024–FY2025. Cash flow is not currently supporting reported earnings (free cash flow is negative relative to net income), which raises concerns about working-capital needs and the sustainability of profitability until conversion improves.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.78B	2.32B	1.99B	1.82B	1.65B
Gross Profit	527.70M	442.30M	370.10M	313.20M	275.90M
EBITDA	169.50M	142.70M	161.30M	144.20M	73.10M
Net Income	12.50M	46.30M	90.20M	78.70M	35.80M
Balance Sheet
Total Assets	2.84B	2.77B	1.83B	1.57B	1.54B
Cash, Cash Equivalents and Short-Term Investments	96.50M	85.80M	68.40M	53.50M	51.80M
Total Debt	1.05B	1.07B	317.90M	156.30M	193.60M
Total Liabilities	1.63B	1.58B	734.00M	539.40M	565.30M
Stockholders Equity	1.21B	1.19B	1.10B	1.03B	974.40M
Cash Flow
Free Cash Flow	1.40M	13.90M	-6.20M	57.90M	93.90M
Operating Cash Flow	36.10M	43.60M	23.30M	75.20M	105.20M
Investing Cash Flow	10.70M	-758.50M	-138.00M	-16.50M	-500.00K
Financing Cash Flow	-33.70M	729.20M	137.70M	-59.80M	-469.50M

AAR Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 94.73
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

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 94.73 is above the 20-day moving average (MA) of 85.09, above the 50-day MA of 83.26, and above the 200-day MA of 73.28, indicating a bullish trend. The MACD of 2.19 indicates Negative momentum. The RSI at 73.85 is Negative, neither overbought nor oversold. The STOCH value of 77.85 is Neutral, 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
VSEC	73 Outperform	$4.67B	155.21	5.28%	0.22%	9.22%	65.05%
DCO	65 Neutral	$1.58B	-45.19	-5.27%	―	3.16%	-213.56%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
AIR	60 Neutral	$3.75B	36.86	6.86%	―	17.59%	-56.15%
MRCY	57 Neutral	$5.33B	―	-2.24%	―	8.63%	72.72%

AAR Corporate Events

AAR Announces Acquisition of Aircraft Reconfig Technologies

On December 17, 2025, AAR CORP., through its subsidiary AAR Aircraft Services, announced a definitive agreement to acquire Aircraft Reconfig Technologies LLC, a leading company in aircraft interiors engineering, for $35 million in cash. The acquisition, expected to close in the fourth quarter of Fiscal Year 2026, will expand AAR’s engineering and certification capabilities, enhance its offerings in its Repair & Engineering division, and accelerate growth through proprietary solutions, solidifying its position as North America’s leading independent MRO provider.

The most recent analyst rating on (AIR) stock is a Buy with a $100.00 price target. To see the full list of analyst forecasts on AAR stock, see the AIR Stock Forecast page.

AAR Appoints Sarah Flanagan as Interim CFO

On December 1, 2025, Sean M. Gillen announced his resignation as AAR‘s Chief Financial Officer, effective December 11, 2025, to pursue a career opportunity outside the aviation industry. His departure was not due to any disagreements with the company. Subsequently, on December 4, 2025, AAR appointed Sarah L. Flanagan, the company’s Vice President of Financial Operations since 2017, as the Interim Chief Financial Officer. Flanagan, who has been with AAR since 2012, brings extensive experience from her previous roles at Honeywell International and PricewaterhouseCoopers. Her appointment is expected to ensure a smooth transition and continued financial leadership for AAR.

The most recent analyst rating on (AIR) stock is a Buy with a $90.00 price target. To see the full list of analyst forecasts on AAR stock, see the AIR Stock Forecast page.

AAR Highlights Strategic Focus at Baird Conference

On November 13, 2025, AAR CORP. participated in the Baird Global Industrial Conference in Chicago and shared an investor presentation on its website. The presentation highlighted AAR’s strategic focus on high-growth and high-margin segments within the aviation aftermarket, emphasizing its repositioning efforts, strategic acquisitions, and enhanced intellectual property profile. This move aims to strengthen AAR’s market position and drive future growth and margin expansion.

The most recent analyst rating on (AIR) stock is a Buy with a $93.00 price target. To see the full list of analyst forecasts on AAR stock, see the AIR Stock Forecast page.

AAR Corp Acquires HAECO Americas for $80 Million

On November 3, 2025, AAR CORP. announced the acquisition of HAECO Americas, a major provider of heavy aircraft maintenance, repair, and overhaul services, for $80 million in cash. This acquisition, funded through AAR’s existing revolving credit facility, significantly expands AAR’s maintenance footprint and accelerates its strategic objective to grow its Repair & Engineering segment. The acquisition includes securing multi-year contracts worth over $850 million with key customers, enhancing AAR’s leadership in the North American MRO market. AAR plans to integrate HAECO Americas’ operations, expecting to improve profitability and operational performance through synergy realization and footprint optimization.

The most recent analyst rating on (AIR) stock is a Buy with a $93.00 price target. To see the full list of analyst forecasts on AAR stock, see the AIR Stock Forecast page.