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↓Deteriorating
- +2 more pillars — see the Why tab for full reasoning
AAR Corp. (AIR) Stock Analysis
Catalyst-Driven edge
Industrials · Aerospace & Defense
Hold if already holding. Not a fresh buy at $125.48, but acceptable to hold if already in. Reasons: Concentration risk — Customer: commercial customers (71.1%); Analyst target reached - limited upside remaining.
AAR Corp. is an independent provider of aviation aftermarket products and services operating in over 20 countries through four segments: Parts Supply (40% of fiscal 2025 sales), Repair & Engineering (32%), Integrated Solutions (25%), and Expeditionary Services (3%). The company... Read more
Hold if already holding. Not a fresh buy at $125.48, but acceptable to hold if already in. Reasons: Concentration risk — Customer: commercial customers (71.1%); Analyst target reached - limited upside remaining. Chart setup: No clear chart pattern; technical signals are mixed. Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING) Score 6.0/10, 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: moderate.
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 2026-09-13Recent 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 2026-09-14T20:47:02Z.
Upcoming dated catalysts
Thesis
Key Metrics
Quality Signals
Options Flow
Concentration Risks(10-K Item 1A)
- 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.'
- MEDIUMCustomerU.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 compared to $576.1 million (24.8% of consolidated sales) in fiscal 2024'
- MEDIUMGeographicforeign customers34%10-K Item 1A: 'We market our products and services globally, with 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
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Price Targets
Position Sizing
Risk Alerts
Earnings
Verdict History
Frequently Asked Questions
Hold if already holding. Not a fresh buy at $125.48, but acceptable to hold if already in. Reasons: Concentration risk — Customer: commercial customers (71.1%); Analyst target reached - limited upside remaining. Chart setup: No clear chart pattern; technical signals are mixed. Multiple concerning factors. Consider reducing position. | News modifier +2 (SELL_IF_HOLDING → HOLD_IF_HOLDING) Target $126.32 (+0.7%), stop $118.36 (−6.0%), A.R:R 0.1:1. Score 6.0/10, moderate confidence.
Take-profit target: $126.32 (+0.7% upside). Target $126.32 (+0.7%), stop $118.36 (−6.0%), A.R:R 0.1:1. 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 19.2). TrendMatrix value score: 6.3/10. Verdict: Hold.
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 over 20 countries...
AAR Corp. is an independent provider of aviation aftermarket products and services operating in over 20 countries through four segments: Parts Supply (40% of fiscal 2025 sales), Repair & Engineering (32%), Integrated Solutions (25%), and Expeditionary Services (3%). The company sells new and used serviceable aircraft parts, performs airframe and component MRO, and provides supply-chain logistics and fleet management for commercial airlines and government/defense customers; consolidated sales grew $461.6 million, or 19.9%, in fiscal 2025, with commercial customers accounting for 71.1% of sales