AAR Corp. (AIR)
Valuation Overview•Is AAR Corp. Overvalued or Undervalued?
Priced at a premium to peer multiples and intrinsic cash flows, demanding strong execution to justify current levels.
Fragile underlying quality score of 38/100; weak margins or elevated debt leverage warrant caution.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: Mixed fundamental profile with offsetting strengths and weaknesses.
Wall Street is cautious, forecasting potential downside with steady expected earnings growth. However, capital return yields remain modest, driven predominantly by aggressive share repurchases.
AIR struggles with subpar profitability and pressured margins. However, the balance sheet carries elevated leverage, requiring careful monitoring of debt servicing capabilities.
The company is driving exceptional top-line expansion (15.2% 3Y CAGR) however, earnings have severely contracted over the same period. Operating efficiency remains adequate with margins around 8.6%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $845.1M | +19.9% | +15.2% | +6.1% | +5.7% | |
| EBITDA | $33.9M | — | +19.7% | — | — | |
| Net Income | $68.0M | -73.0% | -45.8% | — | +2.1% | |
| EPS (Diluted) | $1.73 | -72.9% | -45.5% | -13.2% | +3.8% | |
| Free Cash Flow | $74.7M | -89.9% | -71.1% | — | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 19.0% | 18.9% | 18.1% | 16.6% |
| Operating Margin | 8.6% | 6.3% | 6.0% | 5.0% |
| Net Margin | 5.5% | 2.3% | 2.7% | 2.2% |
| FCF Margin | 2.2% | 0.1% | 1.8% | 0.7% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q1'26Latest | $1.21 | $1.25 | +3.3% | ||
| Q1'26 | $1.02 | $1.18 | +15.7% | ||
| Q3'25 | $0.98 | $1.08 | +9.8% | ||
| Q3'25 | $1.00 | $1.16 | +16.0% | ||
| Q1'25 | $0.96 | $0.99 | +3.1% | ||
| Q1'25 | $0.83 | $0.90 | +8.4% | ||
| Q3'24 | $0.82 | $0.85 | +3.7% | ||
| Q3'24 | $0.86 | $0.88 | +2.3% |
Total return is +101.5% (1Y), outperforming the benchmark by +76.5%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +59.7% | +50.4% | — |
| 1Y | +101.5% | +76.5% | — |
| 3YCAGR | +34.6% | +14.2% | — |
| 5YCAGR | +27.8% | +14.2% | — |
| 10YCAGR | +19.3% | +5.5% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about AAR Corp. (AIR) valuation, health, and returns.
AAR Corp. is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Slightly expensive versus peers compared to industry peers. overvalued (implying -52.6% downside from DCF intrinsic value of $63.87)
AAR Corp. has multiple valuation anchors: DCF Intrinsic Value: $63.87 | Peer Relative Fair Value: $121.77 | Wall Street Analyst Target: $120.00 (implying -11.0% upside). A convergence of these signals offers higher conviction.
AAR Corp. displays weak financial health with a composite quality score of 38/100, supported by a Altman Z-Score of 3.7 (safe zone), Piotroski F-Score of 5/9, Return on Invested Capital (ROIC) of 6.4%.
AAR Corp. does not return material capital to shareholders via dividends or share repurchases, electing to retain earnings to fund internal growth.
AAR Corp.'s current growth trajectory is Accelerating. The company achieved +19.9% 1Y revenue growth and -72.9% 1Y EPS growth, compared to its 3Y revenue CAGR of +15.2%.
Wall Street consensus is Buy based on 20 analysts, beating EPS expectations in 100% of recent quarters with a 17-quarter streak. The consensus price target represents a -11.0% change from current levels.
Investment risks for AAR Corp. include: -19.9% 1-year max drawdown, high beta (1.79x market volatility). Volatility risk is characterized by a beta of 1.79x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.