A Look At AAR Corp. (AIR) Valuation After Earnings Turnaround And Raised Full Year Guidance
AAR (AIR) is back in focus after reporting higher sales and earnings, moving from a net loss to a net gain, updating full year guidance, and outlining further acquisition and distribution plans.
See our latest analysis for AAR.
The recent earnings beat, raised full year guidance, new TRIUMPH distribution agreement and ongoing M&A focus appear to have fed into strong momentum, with a 30 day share price return of 17.39% and a 1 year total shareholder return of 41.44%.
If AAR’s recent move has your attention, this can be a useful moment to scan other aerospace names and compare them using aerospace and defense stocks.
With AIR up strongly over the past year and now trading only around 7% below the average analyst price target, the key question is whether recent earnings, guidance and M&A plans leave more upside on the table, or if the market is already pricing in future growth.
With AAR last closing at US$98.23 against a narrative fair value of US$92.25, the current setup points to a modest valuation premium that hinges heavily on execution.
The commercialization of additional MRO capacity in Oklahoma City and Miami, both already sold out before opening, positions AAR to capitalize on the expected long-term rise in global air travel and the need for ongoing maintenance of aging aircraft fleets, supporting robust revenue growth and improved earnings visibility. AAR’s strong growth in new parts Distribution (25%+ organic, significantly above market) directly aligns with increasing demand for resilient supply chains and more diversified inventory management from both commercial and government customers, indicating sustained future revenue expansion and potential for higher margins.
Want to see why this steady outlook still lands on a premium price tag? The key ingredients are firm revenue assumptions, rising margins, and a future earnings multiple that may surprise you.
Result: Fair Value of $92.25 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, this premium view could be challenged if commercial aviation demand softens, or if OEMs expand aftermarket offerings faster than AAR can defend its parts and MRO margins.
Find out about the key risks to this AAR narrative.
If you see the story differently or prefer to weigh the numbers yourself, you can build your own version in just a few minutes: Do it your way.
A great starting point for your AAR research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
