AAR CORP. (AIR) Stock Forecast & Price Target

AAR Corp demonstrated strong financial performance with a significant increase in EBITDA across multiple segments, including a remarkable 79% year-over-year growth in the Expeditionary Services segment, which achieved a margin of 15.3%. The overall EBITDA for the company grew 1% year-over-year to $28.1 million, reflecting a consistent improvement in its profitability metrics, while another segment saw a 34% increase in EBITDA to $43.8 million, achieving a margin of 13.8%. Additionally, earnings per share (EPS) rose 27% year-over-year to $1.08, surpassing consensus estimates by 10.2%, indicating robust financial health and growth potential for AAR Corp.

AAR Corp is anticipated to continue trading at a discount relative to its commercial aerospace manufacturing peers, primarily due to its lower profit margins and investor sentiment that the commercial Maintenance, Repair, and Overhaul (MRO) sector is less appealing compared to other segments. The government's business operations have also contributed negatively to market sentiment, further complicating the company's prospects. Despite a slight increase in organic sales within the Repair & Engineering segment, AAR faces substantial competition from larger firms, and there are concerns over potential reductions in investments from original equipment manufacturers and airlines in their service operations.