AAR Corp. (AIR) Stock Analysis

Why this analysis is different

• A sector-relative MoonshotScore — five pillars (business quality, financial safety, valuation, growth durability, momentum) re-ranked nightly against the full universe of US-listed common stocks.
• An AI Council read across up to eight perspectives — value, macro, quantitative, and momentum lenses — that shows where they disagree instead of averaging the tension away.
• Figures come straight from FMP and Yahoo Finance filings data. The AI writes the narrative around the numbers — it never edits the numbers.

AAR Corp. (AIR) Industrial Operations Profile

AAR Corp. delivers aftermarket support and expeditionary services to the global aerospace and defense sectors. With a focus on MRO, supply chain, and government logistics, AAR leverages its extensive network and engineering capabilities to serve commercial and military clients, operating with a P/E ratio of 25.8 and a profit margin of 5.5%.

What Is the Investment Thesis for AIR?

AAR Corp. presents a compelling investment case based on its established position in the aerospace and defense aftermarket. The company's Aviation Services segment benefits from the increasing demand for MRO services driven by the growing global aircraft fleet. With a market capitalization of $5.43B and a free cash flow of $0.02 billion, AAR demonstrates financial stability. Key catalysts include ongoing government contracts and expansion of its service offerings. However, potential risks include economic downturns affecting airline profitability and increased competition in the MRO market. Investors should monitor the company's ability to maintain its gross margin of 19.0% and effectively manage its supply chain to capitalize on growth opportunities.

Based on FMP financials and quantitative analysis

AIR Key Highlights

• Market Cap of $5.43B indicates a strong presence in the aerospace and defense market.
• P/E ratio of 25.8 suggests a reasonable valuation compared to earnings.
• Profit Margin of 5.5% reflects operational efficiency in a competitive industry.
• Gross Margin of 19.0% demonstrates the company's ability to manage production costs effectively.
• Beta of 1.20 indicates higher volatility compared to the market, potentially offering higher returns but also greater risk.

Who Are AIR's Competitors?

AIR is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are AIR's Key Strengths?

• Comprehensive service offerings in aviation and expeditionary services.
• Strong relationships with commercial and government clients.
• Established presence in the aftermarket support and MRO market.
• Experienced management team and skilled workforce.

What Are AIR's Weaknesses?

• Dependence on the cyclical nature of the aviation industry.
• Exposure to fluctuations in defense spending.
• Limited geographic diversification.
• Relatively low profit margin compared to some competitors.

What Could Drive AIR Stock Higher?

• Increasing demand for MRO services driven by the aging aircraft fleet.
• Continued government spending on defense and logistics.
• Potential new contracts for expeditionary services.
• Expansion of service offerings to include next-generation aircraft.
• Strategic partnerships to enhance capabilities and market reach.

What Are the Key Risks for AIR?

• Economic downturns affecting airline profitability and demand for MRO services.
• Increased competition in the aerospace and defense markets.
• Fluctuations in defense spending and government priorities.
• Supply chain disruptions impacting the availability of aircraft parts and components.
• Geopolitical instability affecting international operations.

What Are the Growth Opportunities for AIR?

• Expansion of MRO Services: The global market for aircraft maintenance, repair, and overhaul (MRO) is projected to grow significantly, driven by the aging aircraft fleet and increasing air travel. AAR Corp. can capitalize on this trend by expanding its MRO service offerings and geographic reach. This includes investing in new technologies and capabilities to service next-generation aircraft, potentially increasing revenue by 10-15% over the next three years.
• Government Contracts: AAR Corp. has a strong track record of securing government contracts for expeditionary services and logistics support. Ongoing defense spending and military modernization programs present significant opportunities for the company to expand its government business. Securing additional contracts could add $50-100 million in annual revenue, enhancing the company's stability and growth prospects.
• Supply Chain Optimization: By optimizing its supply chain and inventory management processes, AAR Corp. can reduce costs and improve efficiency. This includes leveraging data analytics to forecast demand, streamline procurement, and minimize inventory holding costs. Implementing these measures could improve gross margins by 1-2% over the next two years, enhancing profitability.
• Strategic Acquisitions: AAR Corp. can pursue strategic acquisitions to expand its capabilities and market presence. This includes acquiring companies with complementary technologies or geographic footprints. For example, acquiring a specialized component repair company could enhance AAR's service offerings and attract new customers, potentially increasing market share by 5% within the next five years.
• International Expansion: Expanding into new international markets, particularly in Asia-Pacific and the Middle East, presents a significant growth opportunity for AAR Corp. These regions are experiencing rapid growth in air travel and defense spending, creating strong demand for AAR's products and services. Establishing a presence in these markets could increase international revenue by 20-25% over the next five years.

What Opportunities Does AIR Have?

• Expansion of MRO services to support the growing global aircraft fleet.
• Securing additional government contracts for logistics and support services.
• Strategic acquisitions to expand capabilities and market presence.
• International expansion into high-growth markets.

What Threats Does AIR Face?

• Economic downturns affecting airline profitability.
• Increased competition in the MRO market.
• Technological disruptions in the aviation industry.
• Geopolitical instability impacting defense spending.

What Are AIR's Competitive Advantages?

• Established relationships with key players in the aerospace and defense industries.
• Comprehensive service offerings spanning aftermarket support, MRO, and logistics.
• Strong track record of securing government contracts.
• Extensive network of employees and foreign sales representatives.

What Does AIR Do?

Founded in 1951, AAR Corp. has evolved into a leading provider of diverse products and services within the global aerospace and defense markets. The company operates through two primary segments: Aviation Services and Expeditionary Services. The Aviation Services segment offers a comprehensive suite of aftermarket support, including maintenance, repair, and overhaul (MRO) services, inventory management, and distribution of engine and airframe parts. This segment caters to commercial airlines, cargo carriers, regional airlines, and business aviation operators, providing essential services that ensure the operational readiness of aircraft fleets. The Expeditionary Services segment focuses on supporting the movement of equipment and personnel for the U.S. and foreign governments, as well as non-governmental organizations. This includes designing, manufacturing, and repairing transportation pallets, containers, and shelters, along with providing engineering and system integration services for command and control systems. Headquartered in Wood Dale, Illinois, AAR Corp. markets its products and services through its employees and a network of foreign sales representatives, serving a broad customer base that includes original equipment manufacturers (OEMs), aircraft leasing companies, and military customers. With a workforce of 5,700 employees, AAR Corp. continues to adapt and expand its offerings to meet the evolving needs of the aerospace and defense industries.

What Products and Services Does AIR Offer?

• Provides aftermarket support and services to the aviation industry.
• Offers inventory management and distribution services for aircraft parts.
• Performs maintenance, repair, and overhaul (MRO) services for aircraft.
• Sells and leases new, overhauled, and repaired engine and airframe parts.
• Provides performance-based supply chain logistics programs.
• Designs, manufactures, and repairs transportation pallets and containers.
• Offers engineering, design, and system integration services.

How Does AIR Make Money?

• Generates revenue through aftermarket support and MRO services for commercial and military aircraft.
• Earns income from the sale and lease of aircraft parts and components.
• Secures contracts for expeditionary services and logistics support from government and non-governmental organizations.
• Provides engineering and design services for command and control systems.

What Industry Does AIR Operate In?

AAR Corp. operates within the aerospace and defense industry, which is experiencing steady growth driven by increased air travel and defense spending. The market is characterized by technological advancements, stringent regulations, and intense competition. AAR Corp. differentiates itself through its comprehensive service offerings and established relationships with both commercial and government clients.

Who Are AIR's Key Customers?

• Domestic and foreign passenger airlines.
• Domestic and foreign cargo airlines.
• Regional and commuter airlines.
• Business and general aviation operators.
• Domestic and foreign military customers.

FY2026 estForward Outlook

Wall Street analysts project AAR Corp. revenue of about $3.27B for fiscal 2026, with EPS near $4.91. The estimate reflects 5 contributing analysts.

F-Score 5/9Financial Health

AAR Corp.'s Piotroski F-Score is 5/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 4.02 places it in the safe zone, indicating low near-term bankruptcy risk.

ROE 12%Key Financial Metrics

Return on equity for AAR Corp. stands at 12.1%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 5.1%, showing how much profit it generates from its asset base. AIR trades at a trailing price-to-earnings ratio of 25.79, below the Industrials sector average of ~30x. Its free cash flow yield is 1.8%, a gauge of the cash the business throws off relative to its market value. A current ratio of 2.70 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 3.9%, the inverse of the P/E and a quick read on earnings relative to price.

AAR Corp. (AIR) Valuation Context

Valued at $5.43B, AIR is classified as a mid-cap stock. Relative to its peer group, AIR's quantitative score of 55/100 is below the peer average of 65/100.

AIR Revenue & Earnings Trend

In Q1 2026, AIR generated $845.1M in top-line revenue, marking a sequential increase of 6.3%. The company recorded net income of $68.0M, with diluted EPS of $1.71. Revenue has increased across the last three reported quarters, suggesting sustained momentum for this mid-cap Industrials company. Across the four most recent quarters, AIR averaged $1.13 in diluted EPS.

Company Profile

AAR Corp. operates in the Aerospace & Defense industry within the Industrials sector. It is headquartered in Wood Dale, US. The company is led by CEO John McClain Holmes. AIR has traded publicly since 1980.

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Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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