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↑Improving
- Exhausted Near Term Upside↑Improving
- Consistent Earnings Execution↓Deteriorating
- +2 more pillars — see the Why tab for full reasoning
AAR Corp. (AIR) Stock Analysis
Industrials · Aerospace & Defense
Sell if holding. Momentum 3.3/10 is below the 5.0 floor at $99.62 — engine's falling-knife protection flags exit rather than catching a breakdown. Specifics: V7 low-quality RISK_OFF penalty: -0.5 (Q=4.4); Sector modifier (Industrials): -0.7.
AAR Corp. provides products and services to commercial aviation, government, and defense markets in North America, Europe, Africa, Asia, and internationally. It operates through four segments: Parts Supply; Repair, Engineering, and Software; Government Solutions; and Legacy... Read more
Sell if holding. Momentum 3.3/10 is below the 5.0 floor at $99.62 — engine's falling-knife protection flags exit rather than catching a breakdown. Specifics: V7 low-quality RISK_OFF penalty: -0.5 (Q=4.4); Sector modifier (Industrials): -0.7. Chart setup: No clear chart pattern; technical signals are mixed. Score 5.8/10, moderate confidence.
Passes 7/8 gates (favorable risk/reward ratio, clean insider activity, no SEC red flags, news events none recent, earnings proximity 89d clear, semi cycle peak clear, materials cycle peak clear). Fails on weak momentum. Suitability: aggressive.
About AAR Corp.
About AAR Corp.
AAR Corp. generated $1,976.1 million in commercial-customer sales, 71.1% of consolidated sales, in fiscal 2025, a year in which total sales grew $461.6 million, or 19.9%, over fiscal 2024. The company operates four segments - Parts Supply (40% of sales), Repair & Engineering (32%), Integrated Solutions (25%), and Expeditionary Services (3%) - across more than 20 countries. U.S. government and defense customers contributed a further 24.7% of fiscal 2025 sales.
AAR earns revenue by selling new OEM-supplied aircraft parts and used serviceable material (USM) refurbished from acquired aircraft and engines, performing airframe and component maintenance, repair and overhaul (MRO) at six airframe and six component facilities, and running government logistics contracts such as the ten-year INL/A WASS fleet-management contract for the U.S. Department of State. The Parts Supply segment holds exclusive OEM distribution agreements - including an extended arrangement with FTAI Aviation for CFM56 engine used serviceable material through 2030 - and operates an online PAARTS Store for electronic order fulfillment. Integrated Solutions layers on the Trax cloud-based MRO software platform, acquired in fiscal 2023, which the company sells to other airlines and MRO providers. Government sales run through fixed-price, cost-plus, and time-and-materials contracts with the DoD, DoS, and their contractors, while commercial sales follow standard 30-day payment terms. AAR divested its Landing Gear Overhaul business in fiscal 2025 to concentrate on higher-margin core segments.
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A risk the filing quantifies concretely is exposure to U.S. government budget decisions: in April 2025, the White House's Office of Management and Budget proposed cutting the State Department's budget by nearly 50% and closing multiple overseas diplomatic missions, which the 10-K says has already reduced available funding for AAR's DoS contracts by $70 million in annual revenue. Separately, the Commerce Department's Section 232 investigation into national-security effects of commercial aircraft and jet-engine imports, opened in May 2025, could affect AAR's distribution and government-services businesses depending on its outcome, a dependency the company cannot control through diversification alone.
See also: Industrials · Aerospace & Defense
From AAR Corp.'s most recent 10-K filing, extracted September 6, 2026.
Recent developments
updated 2026-10-08Recent 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 (AIR) Results Check: EPS Prints Above Forecast in Latest Trading; The Stock Gains 0.53% for the Current Session - Ne — vinanet.vn positive
- NEWS TD Cowen reiterates Buy on Alaska Air stock ahead of investor day By Investing.com - Investing.com — Investing.com positive
Generated 2026-10-08T11:37:13Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Concentration Risks(10-K Item 1A)
- LOWCustomerU.S. government and their contractors25%10-K Item 1A: 'Our sales to branches, agencies and departments of the U.S. government and their contractors were $687.6 million (24.7% of consolidated sales) in fiscal 2025'
- MEDIUMProductParts Supply segment40%10-K Item 1: 'The Parts Supply segment accounted for approximately 40% of our sales in fiscal 2025'
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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Rating Breakdown
1 floor-breaker
Price action weak — below key moving averages, no momentum carry. Needs a base before trend-continuation setups apply.static
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Sell if holding. Momentum 3.3/10 is below the 5.0 floor at $99.62 — engine's falling-knife protection flags exit rather than catching a breakdown. Specifics: V7 low-quality RISK_OFF penalty: -0.5 (Q=4.4); Sector modifier (Industrials): -0.7. Chart setup: No clear chart pattern; technical signals are mixed. Prior stop was $96.15. Score 5.8/10, moderate confidence.
Take-profit target: $131.32 (+31.8% upside). Prior stop was $96.15. Stop-loss: $96.15.
V7 low-quality RISK_OFF penalty: -0.5 (Q=4.4); Sector modifier (Industrials): -0.7; Negative momentum.
AAR Corp. trades at a P/E of 21.3 (forward 14.8). TrendMatrix value score: 8.0/10. Verdict: Sell.
12 analysts cover AIR with a consensus score of 4.0/5. Average price target: $155.
What does AAR Corp. do?AAR Corp. provides products and services to commercial aviation, government, and defense markets in North America,...
AAR Corp. provides products and services to commercial aviation, government, and defense markets in North America, Europe, Africa, Asia, and internationally. It operates through four segments: Parts Supply; Repair, Engineering, and Software; Government Solutions; and Legacy Commercial Programs. The company sells and leases used serviceable material and aftermarket distribution of new, and original equipment manufacturers supplied replacement parts. It also provides airframe maintenance, repair, and overhaul (MRO) services, such as airframe inspection, painting services, line maintenance, airframe modifications, structural repairs, avionics service and installation, exterior and interior refurbishment and engineering services, and support for various commercial and military aircraft; component MRO services, including repair and overhaul services, engine and airframe accessories, and interior refurbishment; software solutions comprising cloud-based, mobile, and AI-enabled aviation aftermarket software; develops PMA parts for aftermarket applications; and designs proprietary designated engineering representative repairs. In addition, the company designs, manufactures, and repairs transportation pallets; offers fleet management and operations of customer-owned aircraft; provision of supply chain logistics services, such as material planning, sourcing, logistics, information and program management, and parts and component repair and overhaul services; and engineering, design, and system integration services for specialized command and control systems. Further, it provides asset-heavy flight hour-based component pool and repair programs for commercial airlines and distribution of consumables and expendables inventory. Additionally, it offers containers and shelters for military and humanitarian tactical deployment activities; and shelters, such as stationary and vehicle-mounted applications. AAR Corp. was founded in 1951 and is headquartered in Wood Dale, Illinois.