StandardAero, Inc. (SARO) AI Stock Analysis

• Market Cap: $9.42B
• Dividend Yield: N/A
• Average Volume (3M): 2.43M
• Price to Earnings (P/E): 133.6
• Beta (1Y): 1.27
• Revenue Growth: 16.92%
• EPS Growth: N/A
• Country: US
• Employees: 7,700
• Sector: Industrials
• Sector Strength: 92
• Industry: Aerospace & Defense
• EPS (TTM): 0.19
• Shares Outstanding: 334,461,640
• 10 Day Avg. Volume: 3,971,778
• 30 Day Avg. Volume: 2,427,700
• PEG Ratio: -17.62
• Price to Book (P/B): 3.75
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -191.03
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $33.17
• Price Target Upside: 17.79% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 68 Neutral
• Price Target: $31.00 ▲(10.09%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

Earnings

SARO reported strong 1Q25 results as demand for engine MRO remained elevated across all channels with Commercial Aerospace up 18% YoY, Business Aviation up 13% YoY and Military & Helicopter up 10% YoY.

Financial Performance

Engine Services generated segment margins of 13.7% vs. consensus of 13.4% and MSe of 12.9%.

Negative Factors

Cash Flow

Operating cash flow reported was below both MSe and consensus estimates.

Investment Risks

The nature of SARO’s maintenance overhaul and repair business may limit the upside margin potential many investors associate with the aerospace aftermarket.

StandardAero, Inc. Business Overview & Revenue Model

Company Description

StandardAero, 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 Money

StandardAero makes money primarily through its MRO services offered to a wide range of customers in the aerospace industry. The company's revenue model is built on providing essential maintenance and repair services that ensure the safety, efficiency, and longevity of aircraft and their components. Key revenue streams include contracts with commercial airlines, business jet operators, and military organizations for scheduled maintenance, unscheduled repairs, and component overhauls. Additionally, StandardAero benefits from strategic partnerships with original equipment manufacturers (OEMs) and airlines, which can include exclusive service agreements and joint ventures. These partnerships enhance the company's capabilities and market reach, contributing significantly to its earnings.

StandardAero, Inc. Financial Statement Overview

Summary

StandardAero, Inc. shows strong revenue growth and improving profitability margins. The balance sheet reflects a decrease in leverage, though high debt levels remain a concern. Cash flow management needs improvement, as free cash flow is still negative despite better operating cash flows. The company is on a positive trajectory but must address cash flow and leverage challenges for financial stability.

Income Statement

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

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

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.

Breakdown
Dec 2024	Dec 2023	Dec 2022
Income Statement		Total Revenue
5.24B	4.56B	4.15B
	Gross Profit
754.16M	635.28M	545.68M
	EBIT
403.22M	337.36M	262.63M
	EBITDA
551.34M	511.87M	460.21M
	Net Income Common Stockholders
10.97M	-35.06M	-21.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
102.58M	57.98M	120.06M
	Total Assets
6.21B	5.76B	5.73B
	Total Debt
2.41B	3.38B	3.37B
	Net Debt
2.31B	3.32B	3.25B
	Total Liabilities
3.84B	4.61B	4.53B
	Stockholders Equity
2.37B	1.15B	1.20B
Cash Flow		Free Cash Flow
-46.85M	-17.42M	-16.95M
	Operating Cash Flow
76.33M	67.89M	27.26M
	Investing Cash Flow
-235.45M	-112.86M	-60.75M
	Financing Cash Flow
203.76M	-14.69M	-25.78M

StandardAero, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WWD	79 Outperform	$12.53B	34.02	16.35%	0.49%	4.96%	8.41%
LOAR	73 Outperform	$8.12B	227.90	4.62%	―	27.03%	562.31%
AIR	71 Outperform	$2.16B	246.75	-1.08%	―	21.07%	-120.95%
DRS	71 Outperform	$10.92B	47.07	9.50%	0.22%	13.58%	25.96%
SARO	68 Neutral	$9.42B	133.65		―	16.92%	―
Sector *	65 Neutral	$4.41B	12.06	5.22%	249.80%	4.09%	-12.16%
SPR	37 Underperform	$4.35B	―	81.63%	―	-2.91%	-109.95%

StandardAero, Inc. Corporate Events

StandardAero Stockholders Announce Secondary Offering

On March 24, 2025, StandardAero, Inc. announced that two of its stockholders, affiliates of The Carlyle Group Inc. and GIC Private Limited, plan to sell 30,000,000 shares of the company’s common stock in an underwritten secondary offering. The selling stockholders will receive all net proceeds from the sale, with no shares being sold by the company. The offering, managed by J.P. Morgan, Morgan Stanley, and RBC Capital Markets, includes a 30-day option for underwriters to purchase an additional 4,500,000 shares. This move does not impact StandardAero directly but reflects the selling stockholders’ decision to liquidate part of their holdings.