AAR (AIR) AI Stock Analysis

• Market Cap: $2.65B
• Dividend Yield: N/A
• Average Volume (3M): 491.07K
• Price to Earnings (P/E): 214.7
• Beta (1Y): 1.06
• Revenue Growth: 19.91%
• EPS Growth: -73.61%
• Country: US
• Employees: 5,700
• Sector: Industrials
• Sector Strength: 76
• Industry: Aerospace & Defense
• EPS (TTM): 1.16
• Shares Outstanding: 35,847,588
• 10 Day Avg. Volume: 428,769
• 30 Day Avg. Volume: 491,072
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.18
• Enterprise Value/Revenue: 1.13
• Enterprise Value/Gross Profit: 5.94
• Enterprise Value/Ebitda: 18.48
• 1Y Price Target: $84.20
• Price Target Upside: 11.05% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 77 Outperform
• Price Target: $86.00 ▲(13.43% Upside)

AAR Corp's strong financial performance and strategic initiatives are the primary drivers of its stock score. The company's robust revenue growth, improved cash flow, and strategic wins in the aviation sector are significant positives. However, the high P/E ratio suggests potential overvaluation, and moderate profitability margins indicate room for improvement. Technical indicators show a positive trend, supporting the overall favorable outlook.

Positive Factors

Earnings Growth

AAR shares are trading over 3% higher after the company reported 14% normalized organic growth in its fiscal fourth quarter, an acceleration from 6% in the previous quarter.

Strategic 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

Operational Challenges

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

Tax Implications

Adjusted EPS for 4Q25 was reduced due to a higher expected tax rate because of the impairment associated with the Landing Gear divestiture.

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. Primarily, the company earns income from its aviation services, which include aircraft maintenance, repair, and overhaul (MRO) services, catering to both commercial and government clients. Additionally, AAR's supply chain management services contribute significantly to its revenue, as it provides parts distribution and logistics support for various aerospace and defense applications. The company also engages in aircraft leasing, which involves acquiring and leasing aircraft to airlines, generating recurring rental income. Strategic partnerships with major aerospace manufacturers and government contracts further bolster AAR's revenue, ensuring a steady flow of business and enhancing its market position.

AAR Financial Statement Overview

Summary

AAR demonstrates robust growth and operational efficiency with excellent revenue growth and improving cash flow. While profitability margins are moderate, indicating room for improvement, the balance sheet reflects a stable financial position, albeit with debt levels that require careful management.

Income Statement

The company shows strong revenue growth with a 19.85% increase in the most recent TTM period compared to the previous year. Gross Profit Margin stands at 18.97% and Net Profit Margin at 0.45%, which are moderate. EBIT and EBITDA margins at 6.66% and 7.15% indicate stable operational efficiency. The trajectory suggests improving performance, but profitability could be further enhanced.

Balance Sheet

The company's debt-to-equity ratio is 0.86, reflecting manageable leverage. Return on Equity (ROE) is low at 1.03%, indicating room for profit improvement. The equity ratio of 42.60% suggests a stable financial position with a solid asset base, although debt levels should be monitored to prevent future risks.

Cash Flow

Free Cash Flow increased significantly by 98.56% in the TTM period. Operating Cash Flow to Net Income is 2.89, showing strong cash generation relative to net income. Free Cash Flow to Net Income is 2.21, indicating efficient cash utilization. The company has shown strong cash flow resilience and growth.

Breakdown	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 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	112.50M	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	36.10M	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: 75.82
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• 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 75.82 is above the 20-day moving average (MA) of 74.74, above the 50-day MA of 73.48, and above the 200-day MA of 65.87, indicating a bullish trend. The MACD of 0.07 indicates Positive momentum. The RSI at 53.50 is Neutral, neither overbought nor oversold. The STOCH value of 20.29 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
AIR	77 Outperform	$2.65B	214.69	1.02%	―	19.91%	-73.61%
VSEC	77 Outperform	$3.33B	92.24	6.22%	0.25%	13.00%	120.90%
DCO	73 Outperform	$1.31B	33.24	5.86%	―	2.42%	72.72%
MRCY	63 Neutral	$3.85B	―	-2.57%	―	9.19%	72.88%
TGI	58 Neutral		―		―	-4.74%	―
Sector *	58 Neutral	HK$14.01B	4.01	-3.70%	5.60%	2.26%	-61.32%
SPR	51 Neutral	$4.67B	―	81.63%	―	-2.60%	-94.76%

AAR Corporate Events

AAR Corp Issues $150M Senior Notes to Reduce Debt

On August 14, 2025, AAR CORP., a leading provider of aviation services, issued $150 million in 6.750% Senior Notes due 2029 as an addition to their existing $550 million notes. The proceeds from this issuance are intended to repay outstanding borrowings under its unsecured revolving credit facility, enhancing the company’s financial flexibility and potentially impacting its market positioning by reducing debt obligations.

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.