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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on AIR

AAR Corp.'s recent performance was negatively impacted by the decline in Airbus stock price, which has crashed from €177.20 in March to €140 due to Donald Trump's tariffs and potential supply chain issues. This development has likely affected AAR's sales and revenue, as the company is a major supplier to Airbus. Additionally, the company's Q3 earnings, although surpassing estimates, missed the Zacks Consensus Estimate by 3%, indicating some weakness in the business.

1.c. Company Highlights

2. AAR Corp. Delivers Strong Q1 FY2026 Earnings, Driven by Parts Supply Growth

AAR Corp.'s financial performance in Q1 FY2026 was impressive, with total adjusted sales growing 13% to $740 million year over year, and organic sales growth of 17%. Adjusted EBITDA increased 18% to $86.7 million, resulting in an adjusted EBITDA margin of 11.7%, up from 11.3%. The company's EPS came in at $1.08, beating estimates of $0.98. The strong top-line growth was driven by a 27% increase in parts supply sales to $318 million, with an adjusted EBITDA margin of 13.8%.

Publication Date: Nov -04

📋 Highlights
  • Total Adjusted Sales Growth:: Rose 13% to $740M YoY, with organic growth of 17%.
  • Parts Supply Performance:: Surged 27% to $318M, achieving 13.8% EBITDA margin ($43.8M).
  • EBITDA Margin Expansion:: Adjusted EBITDA hit $86.7M (+18% YoY), with margins rising to 11.7%.
  • Q2 Guidance:: Sales growth of 7–10% (excluding landed gear) and 9.6–10% operating margin.

Segment Highlights

The parts supply segment was the standout performer, with sales growth of 27% to $318 million. Repair and engineering sales decreased 1% to $215 million, but organic sales growth was 8% due to strong demand. Integrated solutions sales increased 10% year over year to $185 million. The growth in parts supply was driven by new distribution agreements, with John Holmes stating that "the majority of the wins in new distribution agreements have been AAR taking share from competitors."

Outlook and Guidance

AAR expects sales growth of 7% to 10% in Q2, excluding the impact of landed gear, and adjusted operating margin of 9.6% to 10%. For the full fiscal year, the company expects organic sales growth approaching 10%, up from the 9% cited in July. Analysts estimate next year's revenue growth at 10.6%, indicating a positive outlook for the company's continued expansion.

Valuation and Metrics

With a P/E Ratio of 105.9 and an EV/EBITDA of 21.33, the market appears to be pricing in significant growth expectations for AAR Corp. The company's ROE is 2.4%, and ROIC is 4.78%, indicating room for improvement in returns. The Net Debt / EBITDA ratio is 5.33, suggesting a relatively high level of debt. As the company continues to invest in inventory to support strong demand, balancing this with being cash positive will be crucial.

Growth Opportunities

AAR is well-positioned to capitalize on growth opportunities in the engine aftermarket, with 80% of USM's parts business being engine parts. The company's efforts to develop an e-commerce marketplace for Trax are expected to lead to cross-sell opportunities with the parts distribution business, with announcements anticipated in 2026. The acquisition of AeroStrat and its integration with the Trax team also presents potential revenue synergies.

3. NewsRoom

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AAR announces Chief Financial Officer transition

Dec -04

Source: prnewswire.com

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Trax selected to power Pan Am's modern maintenance operations

Nov -25

Source: prnewswire.com

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AAR publishes 2025 Sustainability Report

Nov -18

Source: prnewswire.com

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AAR included among Forbes' America's Dream Employers 2026

Nov -18

Source: prnewswire.com

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Is AAR (AIR) Outperforming Other Aerospace Stocks This Year?

Nov -13

Source:

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AAR earns 2026 Military Friendly® Employer and Military Friendly Spouse® Employer designations

Nov -11

Source: prnewswire.com

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COSORI SMART AIR FRYER SELECTED AS ONE OF OPRAH'S FAVORITE THINGS 2025

Nov -05

Source: prnewswire.com

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AAR acquires HAECO Americas and signs multi-year contracts with key customers, extending North American MRO leadership

Nov -03

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.00%)

6. Segments

Aviation Services

Expected Growth: 1.0%

AAR Corp's Aviation Services segment growth is driven by increasing demand for aircraft maintenance, repair, and overhaul (MRO) services, expansion of commercial aviation fleets, and rising adoption of predictive maintenance technologies. Additionally, the company's strategic partnerships and investments in digital platforms enhance its competitiveness and support growth.

Expeditionary Services

Expected Growth: 1.0%

AAR Corp's Expeditionary Services segment growth is driven by increasing demand for mobility and logistics support from government agencies and defense contractors. The company's expertise in providing rapid response and customized solutions for remote and hostile environments has positioned it for growth. Additionally, the rising need for humanitarian and disaster relief efforts has contributed to the segment's 1.0 growth rate.

7. Detailed Products

Aviation Services

AAR Corp provides aviation services including aircraft maintenance, repair, and overhaul (MRO) services, as well as supply chain management and logistics support.

Expeditionary Services

AAR Corp offers expeditionary services including airlift support, cargo transportation, and logistics services to support military and humanitarian operations.

Mobility Products

AAR Corp designs and manufactures mobility products including pallets, containers, and shelters for military and commercial customers.

Composites

AAR Corp manufactures composite components for aerospace and defense applications, including aircraft structures and satellite components.

Government Services

AAR Corp provides government services including program management, engineering, and logistics support to government agencies.

8. AAR Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

AAR Corp. operates in the aerospace and defense industry, which has a moderate threat of substitutes. While there are some substitutes available, they are not easily accessible, and the company's products and services are highly specialized.

Bargaining Power Of Customers

AAR Corp.'s customers are primarily governments and large corporations, which have limited bargaining power due to the specialized nature of the company's products and services.

Bargaining Power Of Suppliers

AAR Corp. has a moderate bargaining power of suppliers, as it relies on a diverse range of suppliers for its operations. While some suppliers may have significant bargaining power, the company's diversified supply chain mitigates this risk.

Threat Of New Entrants

The aerospace and defense industry has significant barriers to entry, including high capital requirements, specialized expertise, and regulatory hurdles, making it difficult for new entrants to enter the market.

Intensity Of Rivalry

The aerospace and defense industry is highly competitive, with several established players competing for market share. AAR Corp. faces intense competition from companies such as Boeing, Lockheed Martin, and Northrop Grumman.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 21.34%
Debt Cost 4.76%
Equity Weight 78.66%
Equity Cost 11.99%
WACC 10.45%
Leverage 27.13%

11. Quality Control: AAR Corp. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Spirit AeroSystems

A-Score: 5.1/10

Value: 9.6

Growth: 1.1

Quality: 5.2

Yield: 0.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

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Woodward

A-Score: 5.0/10

Value: 1.1

Growth: 5.6

Quality: 6.7

Yield: 0.0

Momentum: 9.0

Volatility: 7.7

1-Year Total Return ->

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BWXT

A-Score: 4.7/10

Value: 0.2

Growth: 6.3

Quality: 5.3

Yield: 1.0

Momentum: 9.5

Volatility: 5.7

1-Year Total Return ->

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Leonardo DRS

A-Score: 4.6/10

Value: 2.0

Growth: 3.7

Quality: 6.2

Yield: 1.0

Momentum: 9.5

Volatility: 5.3

1-Year Total Return ->

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Axon Enterprise

A-Score: 4.6/10

Value: 0.0

Growth: 9.6

Quality: 5.1

Yield: 0.0

Momentum: 9.0

Volatility: 4.0

1-Year Total Return ->

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AAR

A-Score: 4.4/10

Value: 4.5

Growth: 4.9

Quality: 3.1

Yield: 0.0

Momentum: 8.5

Volatility: 5.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.93$

Current Price

82.7$

Potential

-98.88%

Expected Cash-Flows