KeyBanc has increased its price target for AAR Corp. (AIR, Financial) from $80 to $86 while maintaining an Overweight rating on the stock. This decision comes after the company delivered another quarter of results with margins surpassing expectations, attributed to strong operational performance. The firm continues to hold a positive outlook on AAR, highlighting its strategic positioning to benefit from the robust aerospace and defense aftermarket environment, leveraging both organic and inorganic growth opportunities. KeyBanc sees AAR as offering significant value for long-term investors.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for AAR Corp (AIR, Financial) is $79.75 with a high estimate of $83.00 and a low estimate of $75.00. The average target implies an upside of 6.50% from the current price of $74.88. More detailed estimate data can be found on the AAR Corp (AIR) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, AAR Corp's (AIR, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for AAR Corp (AIR, Financial) in one year is $79.88, suggesting a upside of 6.68% from the current price of $74.88. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the AAR Corp (AIR) Summary page.
AIR Key Business Developments
Release Date: July 16, 2025
- Total Revenue: $2.8 billion for fiscal year 2025, up 20% over the prior year.
- Adjusted EBITDA Margin: Increased 140 basis points to 11.8% in fiscal 2025.
- Adjusted Diluted EPS: $3.91, compared to $3.33 last year.
- Q4 Total Adjusted Sales: $736 million, a 12% year-over-year increase.
- Q4 Organic Sales Growth: 14%, excluding Landing Gear.
- Q4 Adjusted EBITDA: $90.9 million, a 19% increase year-over-year.
- Q4 Adjusted Operating Income: $76.9 million, a 25% increase year-over-year.
- Q4 Adjusted Diluted EPS: $1.16, a 32% increase from $0.88 in the same quarter last year.
- Parts Supply Sales Growth: 17% to $306 million year-over-year.
- Parts Supply Adjusted EBITDA Margin: Increased to 17.1% from 14.8% year-over-year.
- Repair and Engineering Sales Growth: 3% to $223 million year-over-year.
- Integrated Solutions Adjusted Sales Growth: 10% year-over-year to $181.5 million.
- Net Debt Leverage: Reduced from 3.06 times to 2.72 times in Q4.
- Q4 Cash Flow from Operations: $51 million.
- Stock Repurchase: $10 million worth of stock at an average price of $52.37 per share in Q4.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AAR Corp (AIR, Financial) delivered a record full-year financial performance with a 20% increase in revenue to $2.8 billion.
- The company achieved a 14% organic sales growth in the fourth quarter, excluding the Landing Gear business.
- AAR Corp (AIR) successfully integrated the Product Support acquisition and completed the divestiture of its Landing Gear Overhaul business.
- The Trax software solution captured new business wins, including a significant contract with Delta Airlines.
- The company reduced its net leverage to 2.7 times and is on track to meet its target leverage of 2.0 to 2.5 times.
Negative Points
- The Repair and Engineering segment experienced a 6% decrease in adjusted EBITDA due to higher costs at the New York facility.
- There are near-term headwinds in the Integrated Solutions segment due to Department of State cost reduction efforts impacting the Iraq aviation operations.
- The company anticipates a seasonally slower sales quarter in Q1 compared to Q4.
- There are costs associated with the launch of the Trax supplier marketplace, which may impact margins.
- The USM business faces constraints in asset availability, affecting growth potential.
