AAR Corp Shares Up 6% on Q3 Beat

AAR (NYSE:AIR) shares dropped more than 16% today, as the company delivered better-than-expected earnings for the third quarter but fell short on revenue and reported a net loss due to a one-time charge.

The company posted adjusted EPS of $0.99, narrowly surpassing analyst expectations of $0.98. However, revenue came in at $678 million, missing the $698.97 million consensus, despite a 20% year-over-year increase driven by strength in aftermarket services.

Parts Supply sales grew 12%, while the Repair & Engineering segment surged over 53%, fueled by contributions from the Product Support acquisition and increased throughput at the company’s Airframe MRO facilities.

AAR also reduced its net leverage ratio from 3.58x to 3.06x over the past year and anticipates further balance sheet strengthening.

Despite the revenue miss and one-off hit to earnings, management emphasized a positive outlook, expecting ongoing sales momentum and additional margin expansion as strategic initiatives take hold.

• Michael Leshock from KeyBanc sets a price target of $83 for NYSE:AIR, indicating a potential upside of 19.41%.
• AAR Corp reports a 26% year-over-year revenue increase in its fiscal second-quarter 2025, with earnings per share (EPS) of 90 cents, surpassing estimates.
• The company's strong financial performance and robust position in the aerospace sector highlight its capacity to capitalize on the increasing demand for aircraft components.

AAR Corp (NYSE: AIR) is a leading provider of aviation services, catering to both commercial and government clients worldwide. The company specializes in aftermarket aircraft support, offering services to airlines, OEMs, fleets, military agencies, and operators. Unlike its competitors, Boeing Co. and Airbus SE, AAR Corp operates independently, providing unbiased solutions without ties to any specific airline or manufacturer.

On January 15, 2025, Michael Leshock from KeyBanc set a price target of $83 for AIR, suggesting a potential upside of approximately 19.41% from its current price of $69.51. This optimistic outlook is supported by AAR Corp's strong financial performance. In its fiscal second-quarter 2025 report, the company reported a 26% year-over-year revenue increase, driven by record sales and improved profit margins.

AAR Corp's earnings per share (EPS) of 90 cents exceeded consensus estimates by 5 cents, showcasing its ability to outperform market expectations. The company's revenues also soared 30% year-over-year to $686.1 million, surpassing the anticipated $654.47 million. This impressive growth underscores AAR Corp's robust position in the aerospace sector and its capacity to capitalize on the increasing demand for aircraft components.

The current stock price of AIR on the NYSE is $69.51, reflecting a slight increase of 0.04, or 0.0576%. Today, the stock has fluctuated between a low of $68.80 and a high of $70.43. Over the past year, AIR has reached a high of $76.34 and a low of $54.71. The company's market capitalization is approximately $2.5 billion, with a trading volume of 177,476 shares.

AAR Corp. (NYSE:AIR) is a prominent player in the aerospace industry, providing a range of services and products to commercial aviation and government customers. The company competes with other aerospace firms like Woodward (WWD), focusing on delivering innovative solutions. AAR's diverse offerings include aviation services, supply chain management, and maintenance, repair, and overhaul (MRO) services.

On January 10, 2025, Garascia Jessica A., a key executive at AAR, sold 1,500 shares of the company's common stock at approximately $66.90 each. This transaction is significant as it reflects insider activity, which investors often scrutinize for potential insights into the company's future performance. Despite the sale, Garascia retains 37,565 shares, indicating continued confidence in AAR's prospects.

AAR's stock performance is under evaluation against other aerospace stocks, including Woodward. The company has been upgraded to a Zacks Rank #2 (Buy), suggesting optimism about its earnings potential. This upgrade indicates that investors might expect the stock to rise as confidence in AAR's financial health grows.

Currently, AIR's stock is priced at $67.72, showing a modest increase of 0.939% with a price change of $0.63. The stock has fluctuated between $64.87 and $67.805 today, reflecting market volatility. Over the past year, AIR has seen a high of $76.34 and a low of $54.71, demonstrating its dynamic market presence.

AAR's market capitalization is approximately $2.43 billion, with a trading volume of 609,786 shares. This market cap indicates the company's size and investor interest, while the trading volume reflects the stock's liquidity. As AAR continues to navigate the aerospace sector, its financial performance and stock movements remain closely watched by investors.

AAR Corp. (NYSE:AIR) shares gained around 5% on Wednesday after the company reported its Q3 results, with EPS of $0.75 meeting the Street estimates. Revenue grew 15% year-over-year to $521 million, beating the Street estimate of $487.4 million.

Commercial sales were up 28% and government sales were down 3%. The company expects similar sales growth results for Q4, driven by a further recovery in commercial, slightly offset by soft government sales.

The company again delivered on margin expansion with adjusted gross margins of 18.1% compared to 17.3% in Q3/22. Management noted that it is submitting a few bids in the hope of generating government contract awards for 2024, but unless something is announced, government is likely to weigh on results in the near term, with flat sales in 2024.

AAR Corp. (NYSE:AIR) reported its Q2 results, with EPS of $0.69 coming in better than the Street estimate of $0.68. Revenue was $470 million, beating the Street estimate of $461.73 million.

The company continued to deliver steady margin improvement, with gross margins of 18.8% (compared to 16.7% in Q2/22) and adjusted operating margins of 7.6% (compared to 6.1% in Q2/22).

According to the analysts at RBC Capital, free cash flow was soft in the quarter, but they continue to believe in the organic growth outlook. The analysts said they can appreciate the investments in working capital to support organic growth, but the potential free cash flow upside remains a focus for investors.

AAR Corp. (NYSE:AIR) reported its Q2 results, with EPS of $0.69 coming in better than the Street estimate of $0.68. Revenue was $470 million, beating the Street estimate of $461.73 million.

The company continued to deliver steady margin improvement, with gross margins of 18.8% (compared to 16.7% in Q2/22) and adjusted operating margins of 7.6% (compared to 6.1% in Q2/22).

According to the analysts at RBC Capital, free cash flow was soft in the quarter, but they continue to believe in the organic growth outlook. The analysts said they can appreciate the investments in working capital to support organic growth, but the potential free cash flow upside remains a focus for investors.