AAR Corp. has delivered four consecutive quarterly earnings beats averaging 12% above consensus and is growing at 25% year over year, but a free cash flow conversion of only 16% of net income raises earnings quality concerns, and the stock has reached its near-term price target with essentially no remaining upside at current prices.
Thesis pillars
- Free Cash Flow Quality Gap→Stable
- Exhausted Near Term Upside↓Deteriorating
- Consistent Earnings Execution→Stable
- +2 more pillars — see the Why tab for full reasoning
AAR Corp. (AIR) Stock Analysis
Breakout setup
Industrials · Aerospace & Defense
Hold if already holding. Not a fresh buy at $143.06, but acceptable to hold if already in. Reasons: Concentration risk — Customer: commercial aviation customers (71.1%); Analyst target reached - limited upside remaining.
AAR Corp. is an independent provider of aviation aftermarket products and services, operating through four segments -- Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services -- across more than 20 countries. The company distributes new OEM parts and... Read more
Hold if already holding. Not a fresh buy at $143.06, but acceptable to hold if already in. Reasons: Concentration risk — Customer: commercial aviation customers (71.1%); Analyst target reached - limited upside remaining. Chart setup: Golden cross, above all MAs, RSI 56, MACD bullish. Mixed signals. Hold existing position. Score 5.9/10, moderate confidence.
Passes 7/9 gates (positive momentum, clean insider activity, no SEC red flags, news events none recent, earnings proximity 45d clear, semi cycle peak clear, materials cycle peak clear). Fails on favorable risk/reward ratio. Suitability: moderate.
About AAR Corp.
About AAR Corp.
AAR Corp. generated approximately $2.78 billion in consolidated sales for fiscal 2025, up 19.9% from the prior year, with commercial aviation customers contributing 71.1% of that total and government and defense customers the remaining 28.9%. The Parts Supply segment led all four operating segments at approximately 40% of sales, followed by Repair & Engineering at 32%, and firm backlog stood at $537.2 million at fiscal year-end, with about 5,600 employees worldwide.
AAR earns revenue primarily by distributing new OEM-supplied replacement parts and selling and leasing used serviceable material (USM) recovered from retired aircraft and engines, supplemented by airframe and component MRO services and government logistics programs. The company holds an exclusive distribution agreement with FTAI Aviation for USM on the CFM56 engine platform through 2030 and serves as prime contractor on the U.S. Department of State's ten-year INL/A WASS fleet-management contract. Of the $537.2 million firm backlog at May 31, 2025, approximately 75% is expected to convert to revenue in fiscal 2026 and another 20% in fiscal 2027. Because AAR generates only about 60% of sales from products and performs limited manufacturing itself, exposure to raw-material costs such as steel and aluminum is confined mainly to its Expeditionary Services pallet and shelter business, leaving labor, facility capacity, and OEM-distribution terms as the larger cost drivers across Parts Supply and Repair & Engineering.
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AAR's government and defense exposure has drifted down as a share of sales even as commercial volumes outgrew it: sales to global government and defense customers rose to $804.3 million in fiscal 2025 from $661.7 million in fiscal 2023, but their share of consolidated sales fell from 33.2% to 28.9% over the same period. That government book concentrates around a small number of long-duration vehicles, including the ten-year INL/A WASS contract with the U.S. Department of State, which the government can terminate for convenience. In May 2025, the U.S. Department of Commerce opened a Section 232 national-security investigation into imports of commercial aircraft, engines, and parts -- an outcome the filing flags as potentially material to AAR's distribution and government-services businesses.
See also: Industrials · Aerospace & Defense
From AAR Corp.'s most recent 10-K filing, extracted August 2, 2026.
Recent developments
updated 2026-08-08Recent Developments — AAR Corp.
Latest news
- NEWS 3 Reasons Why Growth Investors Shouldn't Overlook AAR (AIR) - Yahoo Finance — Yahoo Finance positive
- NEWS 3 Reasons Why Growth Investors Shouldn't Overlook AAR (AIR) - finance.yahoo.com — finance.yahoo.com positive
- NEWS AAR Corp (AIR) Institutional Confidence - TradingKey — TradingKey neutral
- NEWS AAR Corp (AIR) Stock Down 9.8% but Still Overvalued -- GF Score: 83/100 - GuruFocus — GuruFocus negative
- NEWS Why AAR (AIR) Shares Are Getting Obliterated Today - Yahoo Finance — Yahoo Finance negative
Generated 2026-08-09T07:42:09Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Concentration Risks(10-K Item 1A)
- HIGHCustomercommercial aviation customers71%10-K Item 1A: 'Our sales to commercial customers, including major airlines and related OEM suppliers, were $1,976.1 million (71.1% of consolidated sales) in fiscal 2025.'
- MEDIUMCustomergovernment and defense customers29%10-K Item 1: 'Sales to global government and defense customers (including sales to branches, agencies, and departments of the U.S. government) were $804.3 million (28.9% of consolidated sales)'
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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Rating Breakdown
10 dimensions · all in-band
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Hold if already holding. Not a fresh buy at $143.06, but acceptable to hold if already in. Reasons: Concentration risk — Customer: commercial aviation customers (71.1%); Analyst target reached - limited upside remaining. Chart setup: Golden cross, above all MAs, RSI 56, MACD bullish. Mixed signals. Hold existing position. Target $150.92 (+5.5%), stop $133.05 (−7.5%), A.R:R -0.9:1. Score 5.9/10, moderate confidence.
Take-profit target: $150.92 (-11.7% upside). Target $150.92 (+5.5%), stop $133.05 (−7.5%), A.R:R -0.9:1. Stop-loss: $133.05.
Concentration risk — Customer: commercial aviation customers (71.1%); Analyst target reached - limited upside remaining; Earnings estimates trending DOWN.
AAR Corp. trades at a P/E of 30.1 (forward 21.9). TrendMatrix value score: 5.4/10. Verdict: Hold.
12 analysts cover AIR with a consensus score of 4.0/5. Average price target: $145.
What does AAR Corp. do?AAR Corp. is an independent provider of aviation aftermarket products and services, operating through four segments --...
AAR Corp. is an independent provider of aviation aftermarket products and services, operating through four segments -- Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services -- across more than 20 countries. The company distributes new OEM parts and used serviceable material and performs MRO services, generating approximately $2.78 billion in fiscal 2025 sales, with commercial customers accounting for 71.1% of that total.