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↓Deteriorating
- +2 more pillars — see the Why tab for full reasoning
AAR Corp. (AIR) Stock Analysis
Industrials · Aerospace & Defense
Wait for pullback to $128.48. Weak momentum — blocks BUY_NOW at $139.45. Engine's entry $128.48 (Ma50 Sticky) is the shallowest technical level that clears the 2:1 A.R:R minimum. Key risks: Concentration risk — Customer: commercial customers (71.1%); Analyst target reached - limited upside remaining.
AAR Corp. provides aviation aftermarket products and services globally through four segments: Parts Supply (approximately 40% of sales), Repair & Engineering (32%), Integrated Solutions (25%), and Expeditionary Services (3%). The company generated $2.78 billion in consolidated... Read more
Wait for pullback to $128.48. Weak momentum — blocks BUY_NOW at $139.45. Engine's entry $128.48 (Ma50 Sticky) is the shallowest technical level that clears the 2:1 A.R:R minimum. Key risks: Concentration risk — Customer: commercial customers (71.1%); Analyst target reached - limited upside remaining. Chart setup: No clear chart pattern; technical signals are mixed. Mixed signals. Hold existing position. | News modifier +2 (HOLD_IF_HOLDING → STRONG_BUY_WAIT) Score 6.1/10, moderate confidence.
Passes 6/8 gates (positive momentum, clean insider activity, no SEC red flags, earnings proximity 54d clear, semi cycle peak clear, materials cycle peak clear). Fails on favorable risk/reward ratio. Suitability: moderate.
About AAR Corp.
About AAR Corp.
AAR Corp. generated $2.78 billion in consolidated sales in fiscal 2025 across four segments: Parts Supply (approximately 40% of sales), Repair & Engineering (32%), Integrated Solutions (25%), and Expeditionary Services (3%). Commercial customers made up 71.1% of sales while government and defense customers accounted for 28.9%, and international customers represented 34.2% of the total. The company employed approximately 5,600 people worldwide as of May 31, 2025, with a $537.2 million firm backlog at fiscal year-end.
AAR earns revenue primarily through product sales, new OEM-supplied replacement parts and used serviceable material harvested from acquired aircraft and engines, plus repair, overhaul, and logistics services billed under standard commercial purchase orders or government contracts that can be fixed-price, cost-plus-fixed-fee, or time-and-materials. The Integrated Solutions segment operates as prime contractor on the ten-year INL/A WASS contract managing the U.S. Department of State's global aircraft fleet, alongside supply chain logistics for the Department of Defense and the Trax cloud-based MRO software platform. Of the $537.2 million firm backlog at fiscal year-end, roughly 75% is expected to convert to revenue in fiscal 2026 and 20% in fiscal 2027. AAR extended its exclusive agreement with FTAI Aviation for CFM56 engine used serviceable material through 2030 and holds distribution contracts with Unison, Chromalloy, and Ontic.
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AAR's government exposure creates budget-driven revenue risk distinct from its commercial cyclicality: sales to U.S. government branches, agencies, and their contractors reached $687.6 million (24.7% of consolidated sales) in fiscal 2025, concentrated in Department of State flight operations and Department of Defense logistics contracts that are typically terminable for convenience. In April 2025, the White House Office of Management and Budget proposed cutting the State Department's budget by nearly 50%, a move that has already reduced available funding for AAR's DoS contracts by $70 million in annual revenue. A negative outcome from the Commerce Department's Section 232 national security investigation into commercial aircraft and jet engine imports, initiated in May 2025, could compound pressure on this government-dependent revenue base.
See also: Industrials · Aerospace & Defense
From AAR Corp.'s most recent 10-K filing, extracted July 26, 2026.
Recent developments
updated 2026-07-30Recent 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) Stock Down 9.8% but Still Overvalued -- GF Score: 83/100 - GuruFocus — GuruFocus negative
- NEWS Why AAR (AIR) Shares Are Getting Obliterated Today - Yahoo Finance — Yahoo Finance negative
- NEWS AAR Corp. (AIR) Edges Higher as Aerospace Sector Shows Resilience - Social Sentiment - dars.gov.et — dars.gov.et positive
Generated 2026-07-31T05:18:55Z.
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.'
- MEDIUMCustomergovernment and defense customers29%10-K Item 1: 'Sales to global government and defense customers ... were $804.3 million (28.9% of consolidated sales)'
- 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
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Price Targets
Position Sizing
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Earnings
Verdict History
Frequently Asked Questions
Wait for pullback to $128.48. Weak momentum — blocks BUY_NOW at $139.45. Engine's entry $128.48 (Ma50 Sticky) is the shallowest technical level that clears the 2:1 A.R:R minimum. Key risks: Concentration risk — Customer: commercial customers (71.1%); Analyst target reached - limited upside remaining. Chart setup: No clear chart pattern; technical signals are mixed. Mixed signals. Hold existing position. | News modifier +2 (HOLD_IF_HOLDING → STRONG_BUY_WAIT) Target $142.32 (+2.1%), stop $114.95 (−21.3%), A.R:R -0.8:1. Score 6.1/10, moderate confidence.
Take-profit target: $142.32 (-9.4% upside). Target $142.32 (+2.1%), stop $114.95 (−21.3%), A.R:R -0.8:1. Stop-loss: $114.95.
Concentration risk — Customer: commercial customers (71.1%); Analyst target reached - limited upside remaining; Near 52-week high (5.0% away).
AAR Corp. trades at a P/E of 29.0 (forward 20.7). TrendMatrix value score: 5.8/10. Verdict: Buy (Wait for Entry).
11 analysts cover AIR with a consensus score of 4.1/5. Average price target: $145.
What does AAR Corp. do?AAR Corp. provides aviation aftermarket products and services globally through four segments: Parts Supply...
AAR Corp. provides aviation aftermarket products and services globally through four segments: Parts Supply (approximately 40% of sales), Repair & Engineering (32%), Integrated Solutions (25%), and Expeditionary Services (3%). The company generated $2.78 billion in consolidated sales in fiscal 2025, with 71.1% from commercial airline and OEM customers and 28.9% from government and defense customers. AAR holds exclusive OEM distribution relationships in select markets and serves as prime contractor on the ten-year INL/A WASS contract managing the U.S. Department of State's global aircraft fleet.