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↑Improving
- Consistent Earnings Execution↑Improving
- +2 more pillars — see the Why tab for full reasoning
AAR Corp. (AIR) Stock Analysis
Catalyst-Driven edge
Industrials · Aerospace & Defense
Sell if holding. At $112.12, A.R:R 1.4:1 is below the 1.5:1 minimum. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: V7 low-quality RISK_OFF penalty: -0.5 (Q=4.2); Sector modifier (Industrials): -0.7.
AAR Corp. provides aviation aftermarket services through four segments — Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services — serving commercial airlines, OEMs, and U.S. defense agencies. Parts Supply (40% of fiscal 2025 sales) and Repair &... Read more
Sell if holding. At $112.12, A.R:R 1.4:1 is below the 1.5:1 minimum. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: V7 low-quality RISK_OFF penalty: -0.5 (Q=4.2); Sector modifier (Industrials): -0.7. Chart setup: No clear chart pattern; technical signals are mixed. Score 5.9/10, moderate confidence.
Passes 5/8 gates (clean insider activity, no SEC red flags, news events none recent, semi cycle peak clear, materials cycle peak clear). Fails on weak momentum and favorable risk/reward ratio. Suitability: aggressive.
About AAR Corp.
About AAR Corp.
AAR Corp. generated 40% of fiscal 2025 sales from its Parts Supply segment, 32% from Repair & Engineering, 25% from Integrated Solutions, and 3% from Expeditionary Services, with $687.6 million, or 24.7% of consolidated sales, coming from the U.S. government and its contractors. The company operates six airframe maintenance facilities and six component repair facilities across the United States, Canada, Thailand, and the Netherlands.
The company earns revenue primarily by selling and leasing used serviceable material (USM) and distributing new OEM replacement parts under exclusive distribution agreements — AAR is the sole authorized reseller for more than 30 product lines spanning parts from over 20 OEMs — alongside airframe and component MRO services for narrow-body Airbus, Boeing, and Embraer regional aircraft. Its Integrated Solutions segment layers in higher-visibility government work, including a ten-year prime contract to operate and maintain the U.S. Department of State's global fixed- and rotary-wing aircraft fleet under the INL/A WASS program, plus flight-hour component inventory programs for commercial airline customers and Trax maintenance software. U.S. government and contractor sales, concentrated in DoD aircraft sustainment and DoS flight operations, are typically one-year contracts renewable annually at the government's option, exposing AAR to congressional appropriations cycles rather than commercial capex timing.
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AAR's government exposure is narrower than a defense prime's but still material: U.S. government and contractor sales reached $687.6 million, or 24.7% of consolidated sales, in fiscal 2025, and the filing discloses a direct hit from federal budget action rather than a hypothetical risk — in April 2025 the White House's Office of Management and Budget proposed cutting the State Department's budget by nearly 50%, which the company says has already reduced available funding for its DoS contracts by $70 million in annual revenue. That single agency-budget decision illustrates how AAR's DoS and DoD work remains subject to appropriations risk outside its control.
See also: Industrials · Aerospace & Defense
From AAR Corp.'s most recent 10-K filing, extracted August 30, 2026.
Recent developments
updated 2026-09-18Recent 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 AAR Corp (AIR) Stock Down 9.8% but Still Overvalued -- GF Score: 83/100 - GuruFocus — GuruFocus negative
Generated 2026-09-18T12:07:06Z.
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'
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. At $112.12, A.R:R 1.4:1 is below the 1.5:1 minimum. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: V7 low-quality RISK_OFF penalty: -0.5 (Q=4.2); Sector modifier (Industrials): -0.7. Chart setup: No clear chart pattern; technical signals are mixed. Prior stop was $107.44. Score 5.9/10, moderate confidence.
Take-profit target: $126.32 (+12.7% upside). Prior stop was $107.44. Stop-loss: $107.44.
V7 low-quality RISK_OFF penalty: -0.5 (Q=4.2); Sector modifier (Industrials): -0.7; Negative momentum.
AAR Corp. trades at a P/E of 24.1 (forward 17.9). TrendMatrix value score: 6.8/10. Verdict: Sell.
12 analysts cover AIR with a consensus score of 4.0/5. Average price target: $145.
What does AAR Corp. do?AAR Corp. provides aviation aftermarket services through four segments — Parts Supply, Repair & Engineering, Integrated...
AAR Corp. provides aviation aftermarket services through four segments — Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services — serving commercial airlines, OEMs, and U.S. defense agencies. Parts Supply (40% of fiscal 2025 sales) and Repair & Engineering (32%) lead, while U.S. government sales totaled $687.6 million, or 24.7% of consolidated sales.