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StandardAero, Inc. (SARO)
NYSE:SARO
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StandardAero, Inc. (SARO) AI Stock Analysis

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SARO

StandardAero, Inc.

(NYSE:SARO)

Rating:68Neutral
Price Target:
$31.00
▲(10.40%Upside)
StandardAero, Inc. demonstrates strong growth and improving profitability, with positive momentum in its stock price. However, high debt and negative free cash flow present significant risks. The high P/E ratio suggests overvaluation, further limiting the stock's appeal. Overall, while the company shows promise, addressing financial and valuation concerns is crucial.
Positive Factors
Revenue Growth
Added capabilities on the LEAP, CFM56, and CF34 engines support long-term revenue growth, and the 'stickiness' of engine maintenance is expected to insulate the company from short-term volatility of passenger travel.
Strategic Expansion
StandardAero is making strategic moves to focus on higher-growth and higher-margin areas.
Negative Factors
Margin Pressure
SARO's positioning within the aftermarket may ultimately limit margin upside due to its focus on 'wrench-turning' rather than 'part-making'.
Operating Cash Flow
Operating cash flow reported was below both MSe and consensus estimates.

StandardAero, Inc. (SARO) vs. SPDR S&P 500 ETF (SPY)

StandardAero, Inc. Business Overview & Revenue Model

Company DescriptionStandardAero, Inc. provides aerospace engine aftermarket services for fixed and rotary wing aircraft in the United States, Canada, the United Kingdom, Rest of Europe, Asia, and internationally. It operates in two segments, Engine Services and Component Repair Services. The Engine Services segment provides a suite of aftermarket services, including maintenance, repair and overhaul, on-wing and field service support, asset management, and engineering and related solutions to customers in the commercial aerospace, military and helicopter, and business aviation end markets. The Component Repair Services segment offers engine component and accessory repairs to the commercial aerospace, military and helicopter, land and marine, and oil and gas end markets. The company was founded in 1911 and is headquartered in Scottsdale, Arizona.
How the Company Makes MoneyStandardAero makes money primarily through its MRO services, which involve repairing, maintaining, and overhauling aircraft engines and related components. These services are crucial for ensuring the operational efficiency and safety of aircraft, thus forming the core revenue stream for the company. StandardAero operates through a network of service centers and facilities worldwide, allowing it to serve a broad client base that includes commercial airlines, government and military organizations, and business jet operators. The company also benefits from strategic partnerships and long-term contracts with major engine manufacturers and aircraft operators, which provide stable and recurring revenue opportunities. Additionally, StandardAero may generate income from the sale of spare parts and technical consultancy services, further diversifying its revenue streams.

StandardAero, Inc. Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: -1.82%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong start to 2025 with significant revenue growth and an increase in guidance, showcasing robust performance across key segments. However, challenges such as tariff impacts and margin pressures from new program ramps were noted, but they were outweighed by the positive momentum and strategic progress in core areas.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Revenue grew 16% year-over-year to $1.4 billion, with 14.4% organic growth. Adjusted EBITDA grew by 20% to $198 million.
Commercial Aerospace Performance
Commercial aerospace revenue grew 18% year-over-year, driven by strong demand and engine maintenance activity.
Business Aviation and Military Growth
Business Aviation Group increased 13% and military business grew 10% versus Q1 last year.
Component Repair Services Expansion
Component Repair Services revenue increased 21%, with a 32% growth in adjusted EBITDA and 240 basis points of margin expansion.
Increased 2025 Guidance
Revenue guidance increased to $5.825-$5.975 billion and adjusted EBITDA to $775-$795 million despite a $15 million tariff impact.
LEAP Program Progress
Secured additional regulatory approvals for LEAP engines and completed the first LEAP shop visit and delivery.
CF34 Platform Success
Record quarter on the CF34 platform following investment to expand the GE relationship.
Negative Updates
Tariff Impact
Estimated net impact of tariffs on the business is $15 million for 2025.
Free Cash Flow Usage
Free cash flow was a use of $64 million in Q1 due to working capital needs, taxes, and strategic growth investments.
LEAP and CFM56 Margin Headwinds
Engine Services margins were flat due to initial lower-margin work as production ramps for LEAP and CFM56 programs.
Temporary Headwinds in Component Repair
Temporary headwinds from facility consolidation and exit of a low-margin noncore accessories product line.
Company Guidance
During the StandardAero First Quarter 2025 Earnings Call, several key metrics and projections were highlighted. The company achieved a 16% year-over-year revenue growth, reaching $1.4 billion, and a 20% increase in adjusted EBITDA, totaling $198 million. Adjusted EBITDA margins expanded by 40 basis points to 13.8%. The commercial aerospace sector grew by 18%, driven by high demand across major platforms and engine maintenance activities. Business Aviation and military segments also saw growth, with increases of 13% and 10% respectively. Despite potential tariff impacts estimated at $15 million for 2025, the company raised its sales and earnings guidance, now projecting annual revenues between $5.825 billion and $5.975 billion and adjusted EBITDA between $775 million and $795 million. Free cash flow usage improved by $38 million year-over-year, and the company reported a net debt to adjusted EBITDA leverage ratio of 3.09x. The call also emphasized strategic investments in the LEAP program and component repair capabilities, which are expected to drive long-term growth.

StandardAero, Inc. Financial Statement Overview

Summary
StandardAero, Inc. shows strong revenue growth and improved profitability margins. However, high debt levels and negative free cash flow pose challenges. The company needs to address these issues for better financial stability.
Income Statement
75
Positive
StandardAero, Inc. shows strong revenue growth with a 14.8% increase from 2023 to 2024, and a 10% increase from 2022 to 2023. The gross profit margin improved to 14.4% in 2024 from 13.9% in 2023, indicating better cost management. The net profit margin turned positive at 0.2% in 2024, recovering from a net loss in previous years. However, EBIT and EBITDA margins, while positive, indicate room for improvement at 7.7% and 10.5%, respectively.
Balance Sheet
68
Positive
The company's debt-to-equity ratio improved to 1.02 in 2024 from 2.94 in 2023, showing a reduction in leverage. Return on equity increased to 0.5% in 2024 from negative figures previously, but remains relatively low. The equity ratio improved to 38.2% from 19.9% in 2023, indicating stronger equity compared to total assets. Despite these improvements, high debt levels pose a potential risk.
Cash Flow
60
Neutral
Operating cash flow increased slightly to $76.3M in 2024, and the free cash flow improved, though still negative at -$46.9M. The free cash flow to net income ratio remains negative, reflecting ongoing challenges in generating free cash flow. The operating cash flow to net income ratio is positive, indicating some efficiency in converting profits into cash flow.
BreakdownTTMDec 2024Dec 2023Dec 2022
Income Statement
Total Revenue5.44B5.24B4.56B4.15B
Gross Profit718.28M754.16M635.28M545.68M
EBITDA536.28M560.51M530.20M459.14M
Net Income70.73M10.97M-35.06M-21.00M
Balance Sheet
Total Assets6.50B6.21B5.76B5.73B
Cash, Cash Equivalents and Short-Term Investments140.82M102.58M57.98M120.06M
Total Debt2.52B2.41B3.38B3.37B
Total Liabilities4.06B3.84B4.61B4.53B
Stockholders Equity2.44B2.37B1.15B1.20B
Cash Flow
Free Cash Flow-64.34M-46.85M-17.42M-16.95M
Operating Cash Flow61.42M76.33M67.89M27.26M
Investing Cash Flow-257.50M-235.45M-112.86M-60.75M
Financing Cash Flow228.69M203.76M-14.69M-25.78M

StandardAero, Inc. Technical Analysis

Technical Analysis Sentiment
Negative
Last Price28.08
Price Trends
50DMA
29.84
Negative
100DMA
28.41
Negative
200DMA
27.97
Positive
Market Momentum
MACD
-0.48
Positive
RSI
32.78
Neutral
STOCH
7.75
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SARO, the sentiment is Negative. The current price of 28.08 is below the 20-day moving average (MA) of 29.80, below the 50-day MA of 29.84, and above the 200-day MA of 27.97, indicating a neutral trend. The MACD of -0.48 indicates Positive momentum. The RSI at 32.78 is Neutral, neither overbought nor oversold. The STOCH value of 7.75 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SARO.

StandardAero, Inc. Risk Analysis

StandardAero, Inc. disclosed 56 risk factors in its most recent earnings report. StandardAero, Inc. 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

StandardAero, Inc. Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$12.79B55.149.99%0.42%13.58%25.96%
77
Outperform
$15.38B40.9216.76%0.40%5.53%5.56%
75
Outperform
$2.75B227.641.02%19.91%-73.61%
68
Neutral
$9.43B133.27
16.92%
66
Neutral
$6.79B188.064.62%27.03%562.31%
60
Neutral
$4.88B81.63%-2.91%-109.95%
58
Neutral
HK$14.89B4.69-2.78%5.83%3.80%-54.55%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SARO
StandardAero, Inc.
28.08
-4.89
-14.83%
AIR
AAR
75.82
11.22
17.37%
DRS
Leonardo Drs
43.24
15.18
54.10%
SPR
Spirit AeroSystems
39.82
3.57
9.85%
WWD
Woodward
266.10
111.02
71.59%
LOAR
Loar Holdings Inc.
72.27
9.77
15.63%

StandardAero, Inc. Corporate Events

Executive/Board ChangesShareholder Meetings
StandardAero Holds Annual Stockholders Meeting on June 12
Neutral
Jun 13, 2025

On June 12, 2025, StandardAero, Inc. conducted its Annual Meeting of Stockholders, where approximately 84.26% of the company’s outstanding common stock was represented. During the meeting, stockholders elected Peter J. Clare, Russell Ford, and Andrea Fischer Newman as Class I directors, ratified the appointment of PricewaterhouseCoopers LLP as the independent auditor for 2025, and approved the compensation of the company’s named executive officers. Additionally, it was decided that future advisory votes on executive compensation would occur annually.

The most recent analyst rating on (SARO) stock is a Buy with a $38.00 price target. To see the full list of analyst forecasts on StandardAero, Inc. stock, see the SARO Stock Forecast page.

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.Date of analysis: May 13, 2025