AAR CORP. (AIR) Stock Forecast & Price Target

AAR Corp demonstrated a substantial performance improvement in its Expeditionary Services segment, with EBITDA increasing 79% year-over-year to $3.4 million, contributing to a margin of 15.3%, which reflects a notable uplift of 340 basis points. Overall, the company reported a 1% year-over-year increase in total EBITDA to $28.1 million, achieving a margin of 13.1%, representing a 30 basis point rise. Additionally, another segment saw a significant 34% year-over-year boost in EBITDA, reaching $43.8 million and a margin of 13.8%, which is a 70 basis point improvement, underscoring the company’s solid financial health and growth potential across its various business units.

AAR Corp's financial performance indicates a concerning trend, highlighted by a 1% decline in overall Repair & Engineering sales, despite an organic growth of 8%, which raises questions about the sustainability of revenue growth in this segment. Additionally, the company's substantial free cash flow (FCF) burn of $54 million starkly contrasts with the consensus expectation of a mere $5 million, suggesting significant cash management issues. While the Expeditionary Services segment reported a 38% year-over-year increase to $22 million, it still fell 18.5% short of market expectations, underscoring potential challenges in meeting growth targets across core business segments.