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→Stable
- Consistent Earnings Execution→Stable
- +2 more pillars — see the Why tab for full reasoning
Pillars as of Jul 3, 2026, based on the 10-K filed Jul 22, 2026
AAR Corp. (AIR) Stock Analysis
Range Bound setup
Industrials · Aerospace & Defense
Sell if holding. Multiple concerning factors at $100.08: Concentration risk — Customer: commercial customers including major airlines (72.1%); V7 low-quality RISK_OFF penalty: -0.5 (Q=4.4).
AAR Corp. supplies the aviation aftermarket through four segments: Parts Supply (about 45% of fiscal 2026 sales), Repair, Engineering, and Software (35%), Government Solutions (15%) and Legacy Commercial Programs (5%, being wound down). It sells to airlines, OEMs and government... Read more
Sell if holding. Multiple concerning factors at $100.08: Concentration risk — Customer: commercial customers including major airlines (72.1%); V7 low-quality RISK_OFF penalty: -0.5 (Q=4.4). Chart setup: RSI 51 mid-range, Bollinger mid-band. Score 5.9/10, moderate confidence.
Passes 6/9 gates (positive momentum, favorable risk/reward ratio, clean insider activity, earnings proximity 69d clear, semi cycle peak clear, materials cycle peak clear). Fails on news legal. Suitability: aggressive.
About AAR Corp.
About AAR Corp.
AAR Corp. drew $2,384.1 million, or 72.1% of consolidated sales, from commercial customers in fiscal 2026 and $923.9 million, or 27.9%, from global government and defense customers, for sales of roughly $3.3 billion. Consolidated sales rose $527.5 million, or 19.0%, from the prior year, and the company operates in over 20 countries with approximately 7,100 employees. Firm backlog was $777 million at May 31, 2026, with about 70% expected to be recognized as revenue in fiscal 2027.
AAR reports four segments: Parts Supply at approximately 45% of sales, Repair, Engineering, and Software at 35%, Government Solutions at 15% and Legacy Commercial Programs at 5%. Parts Supply distributes new OEM parts as an authorized distributor for more than 30 product lines from over 20 OEMs, often under exclusive relationships, and sells used serviceable material. Repair, Engineering, and Software runs eight airframe maintenance facilities, five component repair facilities and software platforms including Trax, Aerostrat, Airvoyant and Airinmar. About 65% of sales came from products, and manufacturing is limited to Government Solutions pallets, shelters and containers, so raw material exposure is minimal. Four fiscal 2026 acquisitions added capacity, among them ADI for $137.1 million and HAECO Americas for $78.0 million; HAECO Americas contributed $131.1 million of sales. Customers generally pay on 30-day terms.
Show full overview
Government exposure shapes the risk profile. Sales to U.S. government branches, agencies and departments and their contractors were $787.8 million, 23.8% of consolidated sales, and most are tied to Department of State flight operations and Department of War logistics. AAR is prime contractor on the ten-year INL/A WASS contract that began in fiscal 2018 to operate the global State Department fleet. Government contracts are often subject to termination for convenience, and the government may decline to exercise option years, so funding delays or budget cuts could reduce this revenue. Separately, AAR announced plans to exit Legacy Commercial Programs, a wind-down it expects to take three to four years.
See also: Industrials · Aerospace & Defense
From AAR Corp.'s most recent 10-K filing, extracted October 18, 2026.
Recent developments
updated 2026-10-28Recent 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 2026-10-28T11:39:09Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Concentration Risks(10-K Item 1A)
- HIGHCustomercommercial customers including major airlines72%10-K Item 1A: 'Our sales to commercial customers, including major airlines and related OEM suppliers, were $2,384.1 million (72.1% of consolidated sales) in fiscal 2026.'
- LOWCustomerU.S. government and its contractors24%10-K Item 1: 'Sales to branches, agencies, and departments of the U.S. government and its contractors were $787.8 million (23.8% of consolidated sales)'
Material Events(8-K, last 90d)
- 2026-09-24Item 5.02LOWStockholders approved the AAR CORP. 2026 Stock Plan at the Sept 23, 2026 annual meeting, allowing discretionary equity and cash awards to employees and directors. No officer departure.SEC filing →
- 2026-07-24Item 5.02LOWCompensation committee approved a 161,500-share performance-based restricted stock grant (about $15 million target value) to Chairman, CEO and President John M. Holmes; cliff vests July 31, 2031 on stock price conditions.SEC filing →
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. People who build TrendMatrix, or entities they control, may hold positions, long or short, in securities it covers, and may trade them at any time. Positions are not disclosed individually. Verdicts are generated by an automated model applied by the same rules to every covered stock, and are not adjusted for any position held by the people who build TrendMatrix. We do not accept payment from issuers for coverage.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
Rating Breakdown
10 dimensions · all in-band
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Sell if holding. Multiple concerning factors at $100.08: Concentration risk — Customer: commercial customers including major airlines (72.1%); V7 low-quality RISK_OFF penalty: -0.5 (Q=4.4). Chart setup: RSI 51 mid-range, Bollinger mid-band. Prior stop was $93.07. Score 5.9/10, moderate confidence.
Analyst target: $131.32 (+31.2% upside). Prior stop was $93.07. Stop-loss: $93.07.
Concentration risk — Customer: commercial customers including major airlines (72.1%); V7 low-quality RISK_OFF penalty: -0.5 (Q=4.4); Sector modifier (Industrials): -0.7.
AAR Corp. trades at a P/E of 20.5 (forward 14.9). 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. supplies the aviation aftermarket through four segments: Parts Supply (about 45% of fiscal 2026 sales),...
AAR Corp. supplies the aviation aftermarket through four segments: Parts Supply (about 45% of fiscal 2026 sales), Repair, Engineering, and Software (35%), Government Solutions (15%) and Legacy Commercial Programs (5%, being wound down). It sells to airlines, OEMs and government agencies in over 20 countries, with commercial customers at 72.1% of sales and a firm backlog of $777 million at May 31, 2026.