Value
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.2 |
| P/S | 9.4 |
| EV/EBITDA | 2.9 |
| Fwd P/E | 7.8 |
| PEG | 8.3 |
| Analyst target | 6.0 |
- ▸Forward P/E: 15.7x
- ▸PEG: 0.78
SARO · Why this verdict
Why StandardAero (SARO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
StandardAero's consistent value ranking in the top quartile of aerospace and defense peers and 32% analyst upside suggest the market is underpricing its engine maintenance, repair, and overhaul capabilities, but a borderline quality score and heavy dependence on four OEM suppliers introduce structural fragility.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
StandardAero's four largest original equipment manufacturer parts suppliers control a critical portion of its supply chain, meaning a disruption from any one of those suppliers — due to production constraints, pricing disputes, or geopolitical factors — could delay repair cycles and reduce throughput. Bear case | No material supply disruption from a top-4 OEM supplier causes more than a 5% reduction in throughput capacity in the next 12 months. | →Stable |
| CounterLong-term supply agreements with major OEMs are standard in aviation MRO, and StandardAero's scale likely provides negotiating leverage that reduces spot disruption risk compared to smaller competitors. | ||
StandardAero ranks in the top quartile of aerospace and defense peers on value metrics, with a PEG ratio of 0.78 and a forward P/E of 15.7x that reflect the market's incomplete credit for the durable demand for aviation maintenance services. Peer-rank breakdown | Value rank remains in the top quartile of the aerospace peer group for at least 3 of the next 4 reporting periods. | →Stable |
| CounterAviation MRO companies trade at discounts to defense primes because their revenue is tied to airline fleet utilization rates, which can collapse rapidly in economic downturns or travel disruptions. | ||
Analyst consensus targets imply 32% upside from the current price of $26.98, with the asymmetry ratio nearly meeting the 1.5x threshold required for a new position, suggesting analysts see meaningful value that is not yet reflected in current trading. Targets | Price rises above $30, more than 11% above the current $26.98, within 12 months as the recovery from the shallow death cross progresses. | →Stable |
| CounterThe asymmetry ratio of 1.44 falls just below the minimum 1.5 threshold, meaning the risk-adjusted return profile is technically insufficient even though absolute upside looks attractive. | ||
Free cash flow represents only 31% of net income, a below-average ratio for a services company, indicating that capital expenditures or working capital requirements are absorbing a significant portion of reported earnings and leaving less room for debt reduction or shareholder returns. Quality breakdown | Free cash flow conversion improves to at least 60% of net income within 12 months as the capex cycle moderates. | →Stable |
| CounterAviation MRO capital requirements fluctuate with fleet age cycles; the current low conversion may reflect temporary investments in tooling and capacity that generate long-duration revenue streams. | ||
StandardAero's four largest original equipment manufacturer parts suppliers control a critical portion of its supply chain, meaning a disruption from any one of those suppliers — due to production constraints, pricing disputes, or geopolitical factors — could delay repair cycles and reduce throughput.
→StableBear case
- Expectation
- No material supply disruption from a top-4 OEM supplier causes more than a 5% reduction in throughput capacity in the next 12 months.
CounterLong-term supply agreements with major OEMs are standard in aviation MRO, and StandardAero's scale likely provides negotiating leverage that reduces spot disruption risk compared to smaller competitors.
StandardAero ranks in the top quartile of aerospace and defense peers on value metrics, with a PEG ratio of 0.78 and a forward P/E of 15.7x that reflect the market's incomplete credit for the durable demand for aviation maintenance services.
→StablePeer-rank breakdown
- Expectation
- Value rank remains in the top quartile of the aerospace peer group for at least 3 of the next 4 reporting periods.
CounterAviation MRO companies trade at discounts to defense primes because their revenue is tied to airline fleet utilization rates, which can collapse rapidly in economic downturns or travel disruptions.
Analyst consensus targets imply 32% upside from the current price of $26.98, with the asymmetry ratio nearly meeting the 1.5x threshold required for a new position, suggesting analysts see meaningful value that is not yet reflected in current trading.
→StableTargets
- Expectation
- Price rises above $30, more than 11% above the current $26.98, within 12 months as the recovery from the shallow death cross progresses.
CounterThe asymmetry ratio of 1.44 falls just below the minimum 1.5 threshold, meaning the risk-adjusted return profile is technically insufficient even though absolute upside looks attractive.
Free cash flow represents only 31% of net income, a below-average ratio for a services company, indicating that capital expenditures or working capital requirements are absorbing a significant portion of reported earnings and leaving less room for debt reduction or shareholder returns.
→StableQuality breakdown
- Expectation
- Free cash flow conversion improves to at least 60% of net income within 12 months as the capex cycle moderates.
CounterAviation MRO capital requirements fluctuate with fleet age cycles; the current low conversion may reflect temporary investments in tooling and capacity that generate long-duration revenue streams.
Per-dimension breakdown
Quality
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.8 |
| ROA | 3.6 |
| Gross margin | 0.0 |
| Op margin | 3.5 |
| Net margin | 2.4 |
| Current ratio | 7.4 |
| FCF quality | 2.5 |
| Moat | 4.9 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: 31% FCF/NI
- ▸No competitive moat
Growth
6.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.8 |
| EPS growth | 7.3 |
Momentum
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 9.7 |
| OBV | 1.0 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 8.3 |
| erm sentiment | 5.5 |
- ▸Analyst upside: 27%
Insider
5.1/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.2 |
- ▸Insider selling (low materiality) — $558,992 (0.006% of mkt cap)
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.3 |
| quality rank | 4.2 |
| growth rank | 3.6 |
Technical
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.8 |
| support resistance | 1.6 |
| 52w position | 6.3 |
| gap | 5.0 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.9 |
| days to cover | 6.5 |
| volatility | 4.6 |
| put call | 10.0 |
| implied vol | 4.2 |
| max pain risk | 3.0 |
| debt equity | 5.5 |
- ▸Above max pain $20
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.0 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:4.7>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:48d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:0.7<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (2)
- MOMENTUM:4.7<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.74
Upside
+10.2%
Downside
13.9%
Sizing output
AVOID
SetupMOMENTUM_CONT — Trend continuation, RSI 66, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 6.6 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:0.7<1.5@spot.
The strongest dimensions are Value at 6.6, Growth at 6.5, and Catalyst at 6.5; the weakest are Technical at 3.7, Quality at 3.9, and Peer rank at 4.0. The V9 engine flagged 2 failed gates with 2 warnings, producing an asymmetric reward-to-risk of 0.74 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1StandardAero ranks in the top quartile of aerospace and defense peers on value metrics, with a PEG ratio of 0.78 and a forward P/E of 15.7x that reflect the market's incomplete credit for the durable demand for aviation maintenance services.
Trip ifPeer value rank drops below the median of the aerospace peer group for at least 2 consecutive reporting periods.
- P2Analyst consensus targets imply 32% upside from the current price of $26.98, with the asymmetry ratio nearly meeting the 1.5x threshold required for a new position, suggesting analysts see meaningful value that is not yet reflected in current trading.
Trip ifAnalyst consensus target falls below $25, more than 7% below current estimates, or price drops below $25.09.
- P3StandardAero's four largest original equipment manufacturer parts suppliers control a critical portion of its supply chain, meaning a disruption from any one of those suppliers — due to production constraints, pricing disputes, or geopolitical factors — could delay repair cycles and reduce throughput.
Trip ifA major OEM supplier disruption causes throughput to decline more than 5% below plan in any quarter.
- P4Free cash flow represents only 31% of net income, a below-average ratio for a services company, indicating that capital expenditures or working capital requirements are absorbing a significant portion of reported earnings and leaving less room for debt reduction or shareholder returns.
Trip ifFree cash flow conversion falls below 20% of net income for at least 3 consecutive quarters.