Start here if you're new
what it is
AAR keeps airlines and governments flying by selling parts, fixing aircraft, and handling the ugly logistics nobody wants to mess up.
how it gets paid
Last year Aar made $2.8B in revenue. Parts Supply was the main engine at $1.12B, or 40% of sales.
why it's growing
Revenue grew 19.9% last year. Parts Supply led the quarter with 29% growth.
what just happened
Fiscal Q2 2026: revenue ~$795M (~16% YoY); adjusted EPS ~$1.18 beat ~$1.03 consensus on some feeds while GAAP diluted EPS ~$0.90 missed ~$1.05 on others—label the line item.
At a glance
B+ balance sheet — decent shape, but not bulletproof
25/100 earnings predictability — expect surprises
28.9x trailing p/e — priced about right
10.0% return on capital — nothing to write home about
xvary composite: 55/100 — below average
What they do
AAR keeps airlines and governments flying by selling parts, fixing aircraft, and handling the ugly logistics nobody wants to mess up.
AAR wins because aviation customers hate downtime more than high invoices. The company serves customers in over 100 countries and gets 68% of sales from commercial aviation, where a grounded plane burns money by the hour. Parts supply is 40% of fiscal 2025 sales, which means you are not betting on one repair shop. You are betting on a broad aftermarket machine.
How they make money
$2.8B
annual revenue · their business grew +19.9% last year
Parts Supply
$1.12B
+29%
Repair & Engineering
$0.90B
+16%
Integrated Solutions
$0.70B
+16%
Expeditionary Services
$0.08B
+16%
The products that matter
stocks and sells aircraft components
Parts Supply
$1.1B · 40% of revenue
this $1.1B segment drives 40% of total revenue by supplying the parts airlines need when grounded aircraft become expensive very quickly.
40% of revenue
repairs and certifies aircraft parts
Repair & Engineering
$896M · 32% of revenue
at $896M, this is nearly one-third of the company and the piece that keeps parts airworthy, compliant, and billable.
32% of revenue
bundles parts and support contracts
Integrated Solutions
$700M · 25% of revenue
this $700M segment is one-quarter of sales and matters because larger service contracts tend to smooth demand better than one-off parts orders.
contract exposure
Key numbers
$5.50
fy2027 eps
EPS estimate → projected profit per share → so what: published forecasts show earnings power rising from $4.75 in fiscal 2026 to $5.50 in fiscal 2027, up about 16%.
14.5%
operating margin
Operating margin → profit left after running the business → so what: AAR keeps about $14.50 from every $100 of sales before interest and taxes.
$953M
long-term debt
Long-term debt → money owed beyond one year → so what: debt is real, but at 17% of capital it is not crushing the balance sheet.
28.9x
trailing p/e
P/E → price divided by past earnings → so what: you are paying nearly $29 for each $1 of trailing profit after a big stock run.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 55 / 100
- long-term debt $953M (17% of capital)
- net profit margin 8.2% — keeps 8 cents of every dollar in revenue
- return on equity 13% — $0.13 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in AIR 3 years ago → it's now worth $21,640.
The index would have given you $13,880.
source: institutional data · total return
What just happened
beat estimates
Fiscal Q2 2026 revenue rose ~16% to ~$795M; adjusted EPS ~$1.18 cleared ~$1.03 consensus on several recap feeds.
Parts Supply sales up ~29% YoY per company commentary/recaps. Ignore mismatched “$1.5B revenue / $1.85 EPS” lines that were clearly pulled from a different period or corrupted feed row—always tie EPS to GAAP vs. adjusted definitions in the 10-Q.
$795M
revenue
$1.18
eps
~19.7%
gross margin
the number that mattered
The number that mattered was $1.18 in EPS because it beat the $1.10 estimate and showed the recent acquisitions are landing in the income statement, not just the press release.
-
shares of aar corp are soaring.
-
trailing 12-month price returns are up nearly 75%, with the stock price climbing over 35% in the first few weeks of 2026 alone.indeed, the company has benefited from tailwinds in the aviation sector that we have been expecting for some time.
-
aar’s fiscal second-quarter results were better than expected. (year ends may 31st.) sales rose 16% to $795 million, higher than our estimate of $770 million, fueled by 12% organic growth.
-
meantime, earnings per share jumped 31% to $1.18, versus our forecast for $1.10.
-
the standout was parts supply, where sales rose 29%, driven by higher volumes as the aviation industry’s supply remains constrained.the broader backdrop remains favorable for aftermarket suppliers, as aircraft and engine bottlenecks are keeping fleets older for longer, which is pulling forward maintenance and demand for parts.
sources: AAR fiscal Q2 2026 materials (SEC 10-Q / IR) · recap feeds for adjusted vs GAAP EPS
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What could go wrong
the main risk is not abstract. AAR is coming out of a december 2024 DOJ/SEC bribery settlement while trading at 28.9x trailing earnings. That is a demanding setup for a 6.5% net margin operator.
high
post-settlement execution risk
AAR settled with the DOJ and SEC in december 2024 over foreign bribery allegations. Settlements close one chapter and open another: more oversight, more compliance cost, and more scrutiny on the contracts that matter.
management says this could touch roughly $420M–$700M of revenue tied to affected contracts
high
aftermarket demand cools from unusually helpful conditions
the current story is helped by aircraft shortages, engine bottlenecks, and older fleets staying in service longer. If that normalizes, the extra demand pressure on parts and repairs normalizes with it.
parts supply is $1.1B and 40% of revenue, so a slowdown there hits the center of the thesis
med
thin margins leave less room for mistakes
operating margin is 12.5% and net profit margin is 6.5%. Those numbers are fine, but they do not give you the cushion that richer businesses enjoy when costs rise or contract mix worsens.
25/100 earnings predictability tells you the ride has been bumpier than the stock's current multiple suggests
between the $420M–$700M contract exposure, a $1.1B parts business benefiting from tight industry supply, and a stock already above the $100 midpoint target, a lot has to keep going right.
source: institutional data · regulatory filings · risk analysis
Pay attention to
risk
contract fallout from the settlement
the december 2024 DOJ/SEC case is not just a headline. Watch whether business tied to the cited $420M–$700M revenue range gets delayed, repriced, or lost.
metric
parts supply growth
watch whether the $1.1B Parts Supply segment keeps growing faster than the company. Last read: 29% segment growth versus 16% company sales growth.
trend
margin discipline
track whether operating margin can hold around 12.5%. This is not a high-margin business, so small slippage matters more than you think.
cal
whether buyers keep showing up above the midpoint target
institutions have been net buyers for two straight quarters. If that support fades while the stock stays above the $100 midpoint target, valuation becomes harder to defend.
Analyst rankings
short-term outlook
average
momentum score 3 — no strong edge in the short-term signal. in human-speak, the chart is not doing anything unusual.
risk profile
average
stability score 3 — this sits around the market middle, not a bunker stock and not a chaos machine.
chart momentum
average
technical score 3 — the recent move has been strong, but the model does not flag an unusual technical edge from here.
earnings predictability
25 / 100
that is low. The company can still execute well, but you should expect more variance than you get with steadier compounders.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 162 buyers vs. 130 sellers in 3q2025. total institutional holdings: 36.7M shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$54
$146
$113
current price
$100
target midpoint · 11% from current · 3-5yr high: $175 (+55% · 12% ann'l return)
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