# Aar (AIR.US)

Canonical: https://gigainvestors.com/s/AIR

Analysis as of: 2026-10-16T07:26:19.865Z. Financial observations: FY1997–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $97.98 per share; close as of 2026-10-15.

Estimated value: low $48.86 per share, central $62.22 per share, high $72.56 per share. Buy at or below the central value $62.22 per share. Valuation as of 2026-10-16T07:26:19.865Z; scenarios are not confidence intervals.

Expected annual return: 7.4% at the stated quote. About 7.4% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 2 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 2

- Years with a net loss: 0

- Operating margin variation: 0.29×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.05×

- FY2018: 0.05×

- FY2019: 0.05×

- FY2020: 0.02×

- FY2021: 0.05×

- FY2022: 0.06×

- FY2023: 0.07×

- FY2024: 0.06×

- FY2025: 0.07×

- FY2026: 0.08×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 7.3%

- ROIC, second-lowest year: 5.6%

- Typical minus recent gross margin: -1.8 pp

- Typical gross margin (annual median): 17.0%

- Recent gross margin (lower of latest and 3-year median): 18.8%

- Years with nonpositive capital: 0

- Capital spending / revenue: 1.3%

- ROIC including acquisitions, ten-year median: 4.5%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 5.6%

- FY2018: 7.2%

- FY2019: 9.3%

- FY2020: 3.1%

- FY2021: 6.1%

- FY2022: 7.8%

- FY2023: 8.5%

- FY2024: 6.4%

- FY2025: 7.4%

- FY2026: 10.2%

### economics: pass

- Owner earnings / net income, 5-yr: 1.13×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $470M

- Net income, five-year total: $415M

- Return on incremental invested capital: 29.9%

- Working capital / revenue, annual change: 1.2 pp

- Working capital / revenue, change between three-year averages: 8.8 pp

- Working capital / revenue, final three-year average: 37.3%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2022: 1.20×

- FY2023: 1.00×

- FY2024: 1.25×

- FY2025: 2.64×

- FY2026: 1.04×

### management: fail

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 7.2% vs 7.4%

- Per-share earnings: 1.38 to 1.31 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- five-year and ten-year diluted share growth both above threshold

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 1.0%

- Ordinary dilution, 5-year annual growth: 1.7%

- Market cap gain: $3.1B

- Cumulative retained earnings: $429M

- Diluted shares, 10-year annual growth: 1.0%

- Diluted shares, 5-year annual growth: 1.7%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value growth: -0.7%

- Per-share value change: -$0.07

- Per-share value, starting three-year median: $1.38

- Per-share value, ending three-year median: $1.31

- Buybacks concentrated in cheaper years (correlation): 0.69

- Average buyback yield: 1.3%

- Buyback history: 8 years

- Debt-funded buybacks: Yes

- Acquisition spending: $794M

- Cumulative net income, 10 years: $556M

- ROIC, first three-year median: 7.2%

- ROIC, last three-year median: 7.4%

Chart: Earnings per share; fiscal year observations.

- FY2017: $1.65

- FY2018: $0.45

- FY2019: $0.21

- FY2020: $0.71

- FY2021: $1.01

- FY2022: $2.19

- FY2023: $2.57

- FY2024: $1.31

- FY2025: $0.35

- FY2026: $4.89

### accounting: pass

- stock compensation exceeds 15% of operating cash flow

- Sloan accruals: 2.7%

- Receivables to sales index (DSRI): 0.91×

- Restructuring years, last five: 2

- Stock compensation / operating cash flow: 18.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 0.53×

- Accounting red flags: 1

- Goodwill and intangibles / equity: 0.51×

Chart: Sloan accruals; fiscal year observations.

- FY2017: 2.3%

- FY2018: -3.2%

- FY2019: -3.9%

- FY2020: 2.9%

- FY2021: -4.5%

- FY2022: 0.2%

- FY2023: 3.6%

- FY2024: 0.1%

- FY2025: -0.8%

- FY2026: 2.7%

## Holders

- [Matthew McLennan](https://gigainvestors.com/FE): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Andrew Adams](https://gigainvestors.com/MPF): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Dan Davidowitz](https://gigainvestors.com/pcm): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 31% since Jun 2026 · "Moody’s affirms AAR Corp.’s Ba2 rating, lowers outlook to negative on MRO deal" (finance.yahoo.com, Sep 2026) · sales +19%

Story as of 2026-10-16T09:58:15.750Z; price observation 2026-10-15.

Price needs cash profits to grow 9.5% a year for ten years

- 2025-07-08: AAR Mobility Systems secures $85 million defense contract ([investing.com](https://www.investing.com/news/stock-market-news/aar-mobility-systems-secures-85-million-defense-contract-93CH-4127338))

- 2025-09-24: AIR Q3 Deep Dive: Parts Distribution and Software Bolster Growth, Margins Expand ([finance.yahoo.com](https://finance.yahoo.com/news/air-q3-deep-dive-parts-141053552.html))

- 2026-01-07: AAR targets 17% full-year sales growth while expanding margin profile through acquisitions ([seekingalpha.com](https://seekingalpha.com/news/4537165-aar-targets-17-percent-full-year-sales-growth-while-expanding-margin-profile-through?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2026-09-29: Moody’s affirms AAR Corp.’s Ba2 rating, lowers outlook to negative on MRO deal ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/moody-affirms-aar-corp-ba2-204958177.html))

### Sales · FY2025–2026

sales +19%; source https://www.sec.gov/Archives/edgar/data/1750/000110465926085459/air-20260531x10k.htm; observed 2026-07-22.

- FY2017: $1.8B 

- FY2018: $1.7B 

- FY2019: $2.1B 

- FY2020: $2.1B 

- FY2021: $1.7B 

- FY2022: $1.8B 

- FY2023: $2.0B 

- FY2024: $2.3B 

- FY2025: $2.8B 

- FY2026: $3.3B 

### Gross margin · FY2026

gross margin 18.8%; source https://www.sec.gov/Archives/edgar/data/1750/000110465926085459/air-20260531x10k.htm; observed 2026-07-22.

- FY2017: 15.6% 

- FY2018: 16.9% 

- FY2019: 16.1% 

- FY2020: 13.0% 

- FY2021: 16.7% 

- FY2022: 17.2% 

- FY2023: 18.6% 

- FY2024: 19.1% 

- FY2025: 19.0% 

- FY2026: 18.8% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in aerospace & defense; annual sales are USD 3.3 billion.

- Source: https://www.sec.gov/Archives/edgar/data/1750/000110465926085459/air-20260531x10k.htm (filed 2026-07-22); FY2026: revenue 3308000000; grossProfit 622000000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 18.8% to 19.1% during 2024–26; it earns 7.3% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2024: grossProfit / revenue = 19.1%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2025: grossProfit / revenue = 19%.

- Source: https://www.sec.gov/Archives/edgar/data/1750/000110465926085459/air-20260531x10k.htm (filed 2026-07-22); FY2026: grossProfit / revenue = 18.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); 10-year return on capital observations [[2017,0.056462874845893254],[2018,0.07241866125908974],[2019,0.09345807176586166],[2020,0.03148206434606419],[2021,0.06134925245003697],[2022,0.07820984804829305],[2023,0.08459220325170307],[2024,0.06353738188760394],[2025,0.07376677492493412],[2026,0.10152566479549448]]; median 0.07309271809201193. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 17% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/1750/000110465926085459/air-20260531x10k.htm (filed 2026-07-22); Gross margin observations: [[2021,0.1669793621013133],[2022,0.17208791208791208],[2023,0.1859331826174328]]; range within 2 percentage points.

### Where the cash goes

Paid dividends in 7 of 10 years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2017: growth capex 0; upkeep 33600000; owner earnings 58600000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2018: growth capex 0; upkeep 22000000; owner earnings 34100000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2019: growth capex 0; upkeep 17400000; owner earnings 32900000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2020: growth capex 0; upkeep 23600000; owner earnings 44900000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2021: growth capex 0; upkeep 11300000; owner earnings 60800000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2022: growth capex 0; upkeep 17300000; owner earnings 94500000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2023: growth capex 1600000; upkeep 27900000; owner earnings 90200000. Growth capex / owner earnings = 0.017738359201773836.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2024: growth capex 0; upkeep 29700000; owner earnings 57800000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); FY2025: growth capex 0; upkeep 34700000; owner earnings 33000000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/1750/000110465926085459/air-20260531x10k.htm (filed 2026-07-22); FY2026: growth capex 0; upkeep 65400000; owner earnings 194400000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); Dividend observations: [[2017,10200000],[2018,10300000],[2019,10500000],[2020,10700000],[2021,100000],[2022,16800000],[2023,189700000],[2024,0],[2025,0],[2026,0]]. Zero only counted when supported by a complete cash-flow statement.

### Are managers owners

Insiders own 2.5% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); AIR.US SharesStats.PercentInsiders = 2.471 percentage points; cache date 2026-10-16.

### What could break it

US import tariffs could raise product costs.

- Source: https://www.sec.gov/Archives/edgar/data/1750/000110465926085459/air-20260531x10k.htm (filed 2026-07-22); rcial aviation industry, we are greatly affected by the overall economic conditions and other trends that affect our customers in that industry, including any decrease in outsourcing by aircraft operators or projected market growth that may not materialize or be sustainable. The commercial aviation industry is historically cyclical and has been negatively affected in the past, and could be negatively affected in future periods, by geopolitical events, ongoing conflicts and wars (including the ongoing Russia-Ukraine conflict and Middle East conflicts), trade wars, the imposition or increase in tariffs or retaliatory countermeasures or changes in trade policies, terrorism, weather-related events, natural disasters, pandemics, disruption to fuel and oil production and supply shortages, high fuel and oil prices, other supply chain disruptions, labor issues and strikes (such as the union work stoppage at Boeing), environmental concerns (including climate change), lack of capital, cost inflation, high interest rates, and weak economic conditions, among other things.

As a result of these and other events, from time to time, certain of our customers have filed for bankruptcy protection or ceased operation. The impact of instability in the global financial markets has led, and may in the future lead, airlines to reduce domestic or international capacity. In addition, certain of our airline customers have in the past been impacted by tight credit markets, which limited their ability to buy parts, services, engines, and aircraft. Economic and other factors that adversely affect the aviation industry lead to reduced overall customer demand for our products and services, which decreases our operating income.

A reduction in the operating fleet or flight activity of aircraft both in the U.S. and abroad has resulted in, and may again result in, reduced demand for parts support and maintenance activities for the type of aircraft affected, which decreases our operating income. A deteriorating airline environment may also result in our inability to fully collect outstanding accounts receivable, which we experienced during the height of the pandemic in 2020 and 2021.

Reduced demand from customers caused by weak economic conditions, including tight credit conditions and customer bankruptcies, may adversely impact our financial condition or results of operations. If any of the customers with whom we do business become insolvent or experience substantial financial difficulties, we may be unable to timely collect amounts owed to us by such customers, and we may not be able to sell the inventory we have purchased for such customers, which may adversely affect our results of operations and financial condition. A slowdown in the global economy, or a recession, would negatively impact the commercial aviation industry, and may have a material adverse effect on our business,

### What the price says

The price assumes cash profits grow 9.5% yearly over ten years; actual growth was 39.7%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-07-22); Ten-year compound average after fade. Initial solved rate 0.12399301096514093. Price 97.98; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share 0.1782107479475964 → FY2026 5.0625. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $32.17 per share

- 2016-11: $36.89 per share

- 2016-12: $33.05 per share

- 2017-01: $31.99 per share

- 2017-02: $34.42 per share

- 2017-03: $33.63 per share

- 2017-04: $35.99 per share

- 2017-05: $34.94 per share

- 2017-06: $34.76 per share

- 2017-07: $37.40 per share

- 2017-08: $36.06 per share

- 2017-09: $37.78 per share

- 2017-10: $38.89 per share

- 2017-11: $41.58 per share

- 2017-12: $39.29 per share

- 2018-01: $40.47 per share

- 2018-02: $42.58 per share

- 2018-03: $44.11 per share

- 2018-04: $43.30 per share

- 2018-05: $44.69 per share

- 2018-06: $46.49 per share

- 2018-07: $47.41 per share

- 2018-08: $46.67 per share

- 2018-09: $47.89 per share

- 2018-10: $47.58 per share

- 2018-11: $43.69 per share

- 2018-12: $37.34 per share

- 2019-01: $37.68 per share

- 2019-02: $36.53 per share

- 2019-03: $32.51 per share

- 2019-04: $33.77 per share

- 2019-05: $30.09 per share

- 2019-06: $36.79 per share

- 2019-07: $41.86 per share

- 2019-08: $42.96 per share

- 2019-09: $41.21 per share

- 2019-10: $41.75 per share

- 2019-11: $44.69 per share

- 2019-12: $45.10 per share

- 2020-01: $42.58 per share

- 2020-02: $34.55 per share

- 2020-03: $17.76 per share

- 2020-04: $19.58 per share

- 2020-05: $20.17 per share

- 2020-06: $20.67 per share

- 2020-07: $17.22 per share

- 2020-08: $20.18 per share

- 2020-09: $18.80 per share

- 2020-10: $19.46 per share

- 2020-11: $28.37 per share

- 2020-12: $36.22 per share

- 2021-01: $33.55 per share

- 2021-02: $39.78 per share

- 2021-03: $41.65 per share

- 2021-04: $40.24 per share

- 2021-05: $41.75 per share

- 2021-06: $38.75 per share

- 2021-07: $35.76 per share

- 2021-08: $33.85 per share

- 2021-09: $32.43 per share

- 2021-10: $35.37 per share

- 2021-11: $32.66 per share

- 2021-12: $39.03 per share

- 2022-01: $40.27 per share

- 2022-02: $44.94 per share

- 2022-03: $48.43 per share

- 2022-04: $46.98 per share

- 2022-05: $48.22 per share

- 2022-06: $41.84 per share

- 2022-07: $44.53 per share

- 2022-08: $42.88 per share

- 2022-09: $35.82 per share

- 2022-10: $44.32 per share

- 2022-11: $46.56 per share

- 2022-12: $44.90 per share

- 2023-01: $51.44 per share

- 2023-02: $54.39 per share

- 2023-03: $54.55 per share

- 2023-04: $52.78 per share

- 2023-05: $50.11 per share

- 2023-06: $57.76 per share

- 2023-07: $59.80 per share

- 2023-08: $61.60 per share

- 2023-09: $59.53 per share

- 2023-10: $59.36 per share

- 2023-11: $69.30 per share

- 2023-12: $62.40 per share

- 2024-01: $60.82 per share

- 2024-02: $66.78 per share

- 2024-03: $59.87 per share

- 2024-04: $69.14 per share

- 2024-05: $70.99 per share

- 2024-06: $72.70 per share

- 2024-07: $64.60 per share

- 2024-08: $65.78 per share

- 2024-09: $65.36 per share

- 2024-10: $58.70 per share

- 2024-11: $69.52 per share

- 2024-12: $61.28 per share

- 2025-01: $67.76 per share

- 2025-02: $65.02 per share

- 2025-03: $55.99 per share

- 2025-04: $53.46 per share

- 2025-05: $61.41 per share

- 2025-06: $68.79 per share

- 2025-07: $74.71 per share

- 2025-08: $75.66 per share

- 2025-09: $89.67 per share

- 2025-10: $84.21 per share

- 2025-11: $83.21 per share

- 2025-12: $82.79 per share

- 2026-01: $105.91 per share

- 2026-02: $117.17 per share

- 2026-03: $109.46 per share

- 2026-04: $110.37 per share

- 2026-05: $112.62 per share

- 2026-06: $142.93 per share

- 2026-07: $140.04 per share

- 2026-08: $129.29 per share

- 2026-09: $101.47 per share

- 2026-10: $97.98 per share

## Annual estimated value (USD per share)

- FY2017: low $31.02 per share, central $35.30 per share, high $40.99 per share

- FY2018: low $18.31 per share, central $20.83 per share, high $24.19 per share

- FY2019: low $12.53 per share, central $14.26 per share, high $16.56 per share

- FY2020: low $23.00 per share, central $24.74 per share, high $27.06 per share

- FY2021: low $11.62 per share, central $13.15 per share, high $15.18 per share

- FY2022: low $12.45 per share, central $14.10 per share, high $16.30 per share

- FY2023: low $23.62 per share, central $26.77 per share, high $30.95 per share

- FY2024: low $27.46 per share, central $31.09 per share, high $35.93 per share

- FY2025: low $32.38 per share, central $36.69 per share, high $42.42 per share

- FY2026: low $48.14 per share, central $61.40 per share, high $71.67 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1750/000110465926085459/air-20260531x10k.htm); period 2026-05-31, filed 2026-07-22.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.