AAR (AIR) AI Stock Analysis

• Market Cap: $2.12B
• Dividend Yield: N/A
• Average Volume (3M): 368.14K
• 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: 81
• Industry: Aerospace & Defense
• EPS (TTM): 0.99
• Shares Outstanding: 36,103,800
• 10 Day Avg. Volume: 266,781
• 30 Day Avg. Volume: 368,139
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.55
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 7.44
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $79.00
• Price Target Upside: 34.40% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

AAR Corp's overall stock score reflects a mixed financial performance, with strong revenue growth but challenges in net income and cash flow. Technical indicators suggest a bearish trend, and valuation is unattractive due to a negative P/E ratio. However, a positive earnings call and strategic corporate events provide a solid outlook for future growth, contributing positively to the score.

Positive Factors

Financial Performance

Efficiency efforts have delivered better than expected adjusted EBITDA results, even though the top-line was below expectations due to a specific customer issue.

Margin Expansion

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

New Deals

AIR announced several new deals, including a distribution agreement with Chromalloy for BELAC PW4000 PMA’s and a selection by Cathay Pacific for AIR’s Trax software platform.

Negative Factors

Customer Impact

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

Revenue 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 through various streams, with a significant portion coming from its aviation services and parts supply operations. The company provides maintenance, repair, and overhaul (MRO) services that ensure aircraft are in optimal condition, which is a critical requirement for both commercial airlines and government agencies. AAR also sells and distributes a vast inventory of new and aftermarket spare parts to airlines and other aviation customers worldwide. Additionally, the company offers integrated solutions, including inventory management and logistics services, which help airlines and military customers improve efficiency and reduce costs. Strategic partnerships with original equipment manufacturers (OEMs) and government agencies also play a crucial role in AAR's revenue model, as they enable the company to expand its service offerings and customer base.

AAR Financial Statement Overview

Summary

AAR has shown strong revenue growth and improving gross profit margins, but profitability remains a challenge with low net profit margins and ROE. High leverage is a risk factor, though the equity ratio suggests some balance sheet stability. Cash flow performance is mixed but shows potential with strong operating cash generation.

Income Statement

The company has demonstrated consistent revenue growth, with a significant increase from $1.65 billion in 2021 to $2.57 billion in TTM. Gross profit margins have also improved, standing at 18.8% in TTM. However, the net profit margin has decreased to 0.4% in TTM, indicating pressure on profitability despite revenue growth.

Balance Sheet

The balance sheet shows a relatively high debt-to-equity ratio of 0.9 in TTM, indicating leveraged operations. However, the company maintains a solid equity ratio of 41.5%, providing some financial stability. Return on equity is low at 0.9%, suggesting limited returns on shareholder investment.

Cash Flow

The company's operating cash flow has been positive, but free cash flow shows mixed results, with a recent growth of 151.8% in TTM. The operating cash flow to net income ratio is robust at 4.6, indicating strong cash generation relative to net income, although overall cash flow stability may be a concern.

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

AAR Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 58.78
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AIR, the sentiment is Neutral. The current price of 58.78 is above the 20-day moving average (MA) of 53.45, below the 50-day MA of 59.41, and below the 200-day MA of 63.54, indicating a neutral trend. The MACD of -0.60 indicates Negative momentum. The RSI at 59.55 is Neutral, neither overbought nor oversold. The STOCH value of 93.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AIR.

AAR Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
POWL	78 Outperform	$2.33B	14.68	37.22%	0.55%	38.27%	105.52%
ALG	75 Outperform	$2.08B	18.07	11.88%	0.64%	-3.62%	-15.20%
SXI	68 Neutral	$1.89B	31.42	9.29%	0.78%	2.67%	-18.41%
Sector *	64 Neutral	$4.25B	11.72	5.24%	249.79%	4.07%	-9.45%
AIR	58 Neutral	$2.12B	246.75	-1.08%	―	21.07%	-120.95%
ENR	56 Neutral	$1.72B	35.13	33.46%	4.64%	0.39%	-37.01%
TGI	54 Neutral	$1.97B	282.19	46.74%	―	-8.59%	―

AAR Corporate Events

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.

Spark’s Take on AIR Stock

According to Spark, TipRanks’ AI Analyst, AIR is a Neutral.

AAR Corp’s overall stock score reflects a mixed financial performance with robust revenue growth but challenges in net income and cash flow. The technical indicators suggest a bearish trend, and the valuation appears unattractive due to a negative P/E ratio. However, the positive earnings call and strategic corporate events such as the divestiture and board expansion provide a solid outlook for future growth, contributing positively to the score.

To see Spark’s full report on AIR stock, click here.

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.