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. Analyst target reached at $126.54 — A.R:R is negative (-0.0) — price has exceeded the analyst target. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: Concentration risk — Customer: commercial customers (71.1%).
AAR Corp. is an independent provider of aviation aftermarket products and services, operating in more than 20 countries through four segments: Parts Supply (40% of fiscal 2025 sales), Repair & Engineering (32%), Integrated Solutions (25%), and Expeditionary Services (3%).... Read more
Sell if holding. Analyst target reached at $126.54 — A.R:R is negative (-0.0) — price has exceeded the analyst target. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: Concentration risk — Customer: commercial customers (71.1%). Chart setup: No clear chart pattern; technical signals are mixed. Score 5.8/10, moderate confidence.
Passes 6/8 gates (clean insider activity, no SEC red flags, news events none recent, earnings proximity 17d clear, semi cycle peak clear, materials cycle peak clear). Fails on weak momentum and favorable risk/reward ratio. Suitability: moderate.
About AAR Corp.
About AAR Corp.
AAR Corp. generated 40% of fiscal 2025 sales from its Parts Supply segment, followed by Repair & Engineering at 32%, Integrated Solutions at 25%, and Expeditionary Services at 3%, with firm backlog of $537.2 million at fiscal year-end. Foreign customers accounted for 34.2% of consolidated sales, and the company employed approximately 5,600 people worldwide, including roughly 200 unionized workers in Expeditionary Services.
AAR earns revenue from aftermarket parts distribution and used serviceable material (USM) sales, MRO and airframe repair services, and government logistics programs, split roughly 71% commercial (major airlines and OEM suppliers) and 25% government and defense (the U.S. Department of State and Department of Defense) in fiscal 2025. The company has limited direct manufacturing exposure — it generates about 60% of sales from products but sources most components from third-party OEMs and repair networks — and its Integrated Solutions segment includes a ten-year prime contract with the U.S. Department of State to operate and maintain its global aircraft fleet. In Parts Supply, AAR holds an exclusive agreement with FTAI Aviation to distribute used serviceable material for the CFM56 engine platform through 2030, and firm backlog of $537.2 million is weighted toward near-term conversion, with about 75% expected to convert to revenue in fiscal 2026 and another 20% in fiscal 2027.
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AAR's Integrated Solutions segment carries direct exposure to U.S. State Department budget decisions: in April 2025, the White House's Office of Management and Budget proposed cutting the DoS budget by nearly 50%, closing multiple overseas diplomatic missions, a move the 10-K says has already reduced available funding for AAR's DoS contracts by $70 million in annual revenue. That single line item illustrates how AAR's government book — 24.7% of fiscal 2025 sales — depends on annual congressional appropriations rather than multi-year committed spending, even though the company holds the prime, ten-year INL/A WASS contract supporting DoS flight operations. Further reductions to DoD or DoS budgets could compress this revenue stream independent of AAR's commercial-side performance.
See also: Industrials · Aerospace & Defense
From AAR Corp.'s most recent 10-K filing, extracted August 23, 2026.
Recent developments
updated 2026-09-05Recent 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 2026-09-05T22:02:19Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Concentration Risks(10-K Item 1A)
- MEDIUMProductParts Supply segment40%10-K Item 1: 'The Parts Supply segment accounted for approximately 40% of our sales in fiscal 2025.'
- HIGHCustomercommercial 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.'
- LOWCustomerU.S. government and its 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'
- MEDIUMGeographicforeign customers34%10-K Item 1A: 'approximately 34.2% of our consolidated sales in fiscal 2025 derived from sales to foreign customers'
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
Momentum below the gate floor. Component breakdown shows what dragged the score down.static
Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Sell if holding. Analyst target reached at $126.54 — A.R:R is negative (-0.0) — price has exceeded the analyst target. Reward from here is too thin for a buy — the engine flags exit. Additional concerns: Concentration risk — Customer: commercial customers (71.1%). Chart setup: No clear chart pattern; technical signals are mixed. Prior stop was $118.36. Score 5.8/10, moderate confidence.
Take-profit target: $150.72 (-0.2% upside). Prior stop was $118.36. Stop-loss: $118.36.
Concentration risk — Customer: commercial customers (71.1%); Analyst target reached - limited upside remaining; V7 low-quality RISK_OFF penalty: -0.5 (Q=4.2).
AAR Corp. trades at a P/E of 25.8 (forward 19.3). TrendMatrix value score: 6.1/10. 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. is an independent provider of aviation aftermarket products and services, operating in more than 20 countries...
AAR Corp. is an independent provider of aviation aftermarket products and services, operating in more than 20 countries through four segments: Parts Supply (40% of fiscal 2025 sales), Repair & Engineering (32%), Integrated Solutions (25%), and Expeditionary Services (3%). Commercial airlines and OEM customers generated $1,976.1 million (71.1% of consolidated sales) in fiscal 2025, while U.S. government agencies and their contractors contributed $687.6 million (24.7%), and the company employed approximately 5,600 people worldwide with a $537.2 million backlog at fiscal year-end.