AAR CORP. (AIR) Stock Forecast & Price Target

AAR Corp has demonstrated strong performance in its Expeditionary Services segment, with EBITDA increasing by 79% year-over-year to $3.4 million, resulting in a margin of 15.3%, which reflects a 340 basis points improvement. Additionally, the company's overall EBITDA rose by 1% year-over-year to $28.1 million, achieving a margin of 13.1%, an increase of 30 basis points. Furthermore, AAR's financials show a significant boost in the Repair & Engineering segment, with EBITDA climbing 34% year-over-year to $43.8 million and a margin of 13.8%, up 70 basis points, underscoring the robust operational capabilities across its divisions.

AAR Corp experienced a decrease in Repair & Engineering sales, which declined by 1% year-over-year, despite an organic growth of 8%, indicating potential challenges in sustaining overall revenue growth, as the segment reported sales of $214.6 million. Additionally, the company's free cash flow (FCF) significantly underperformed, with a cash burn of $54 million compared to a consensus estimate of only $5 million, raising concerns about liquidity and operational efficiency. While the Expeditionary Services segment saw a year-over-year increase of 38% to $22 million, it still fell 18.5% short of market expectations, reflecting inconsistencies in performance across segments.