NYSE:AIR

Stock Analysis Report

Executive Summary

AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide.

Snowflake

Fundamentals

Flawless balance sheet and undervalued.


Similar Companies

Share Price & News

How has AAR's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

1.1%

AIR

-0.2%

US Aerospace & Defense

1.8%

US Market


1 Year Return

-7.4%

AIR

8.1%

US Aerospace & Defense

7.3%

US Market

Return vs Industry: AIR underperformed the US Aerospace & Defense industry which returned 8.1% over the past year.

Return vs Market: AIR underperformed the US Market which returned 7.3% over the past year.


Shareholder returns

AIRIndustryMarket
7 Day1.1%-0.2%1.8%
30 Day-9.3%-3.2%-0.7%
90 Day-2.1%3.7%0.06%
1 Year-6.5%-7.4%10.2%8.1%9.7%7.3%
3 Year33.7%30.6%60.7%52.0%46.3%36.9%
5 Year76.8%68.8%95.5%77.1%64.5%46.5%

Price Volatility Vs. Market

How volatile is AAR's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is AAR undervalued compared to its fair value and its price relative to the market?

42.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: AIR ($41.29) is trading below our estimate of fair value ($71.75)

Significantly Undervalued: AIR is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: AIR is good value based on its PE Ratio (17.4x) compared to the Aerospace & Defense industry average (22.4x).

PE vs Market: AIR is good value based on its PE Ratio (17.4x) compared to the US market (17.7x).


Price to Earnings Growth Ratio

Low PEG Ratio: AIR is poor value based on its PEG Ratio (1.1x)


Price to Book Ratio

PB vs Industry: AIR is good value based on its PB Ratio (1.6x) compared to the US Aerospace & Defense industry average (2.4x).


Next Steps

Future Growth

How is AAR forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

16.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AIR's forecast earnings growth (16.3% per year) is above the savings rate (2.7%).

Earnings vs Market: AIR's earnings (16.3% per year) are forecast to grow faster than the US market (14.6% per year).

High Growth Earnings: AIR's earnings are forecast to grow, but not significantly.

Revenue vs Market: AIR's revenue (4.3% per year) is forecast to grow slower than the US market (7.3% per year).

High Growth Revenue: AIR's revenue (4.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: AIR's Return on Equity is forecast to be low in 3 years time (7.4%).


Next Steps

Past Performance

How has AAR performed over the past 5 years?

33.0%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: AIR's earnings have grown significantly by 33% per year over the past 5 years.

Accelerating Growth: AIR's earnings growth over the past year (1.1%) is below its 5-year average (33% per year).

Earnings vs Industry: AIR earnings growth over the past year (1.1%) underperformed the Aerospace & Defense industry 12.2%.


Return on Equity

High ROE: AIR's Return on Equity (9%) is considered low.


Return on Assets

ROA vs Industry: AIR's Return on Assets is below or equal to the Aerospace & Defense industry average last year.


Return on Capital Employed

ROCE Improving: AIR has significantly improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

How is AAR's financial position?


Financial Position Analysis

Short Term Liabilities: AIR's short term assets ($1.0B) exceeds its short term liabilities ($396.4M)

Long Term Liabilities: AIR's short term assets (1.0B) exceeds its long term liabilities (377.2M)


Debt to Equity History and Analysis

Debt Level: AIR's debt to equity ratio (22.2%) is considered satisfactory

Reducing Debt: AIR's debt to equity ratio has reduced from 62.7% to 22.2% over the past 5 years.

Debt Coverage: AIR's debt is well covered by operating cash flow (30.7%).

Interest Coverage: AIR's interest payments on its debt are well covered by EBIT (12.5x coverage).


Balance Sheet

Inventory Level: AIR has a high level of physical assets or inventory.

Debt Coverage by Assets: AIR's debt is covered by short term assets (assets are 5.052420x debt).


Next Steps

Dividend

What is AAR's current dividend yield, its reliability and sustainability?

0.73%

Current Dividend Yield


Dividend Yield vs Market

company0.7%marketbottom25%1.5%markettop25%3.7%industryaverage1.8%forecastin3Years0.5%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: AIR's dividend (0.73%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.45%).

High Dividend: AIR's dividend (0.73%) is low compared to the top 25% of dividend payers in the US market (3.72%).

Stable Dividend: AIR is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: AIR is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: AIR is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of AIR's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of AAR's salary, the management and board of directors tenure and is there insider trading?

3.3yrs

Average management tenure


CEO

John Holmes (42yo)

1.3yrs

Tenure

US$3,345,147

Compensation

Mr. John McClain Holmes III, has been the President at AAR Corp. since June 1, 2017 and its Chief Executive Officer since June 1, 2018. Mr. Holmes served as Chief Operating Officer of Aviation Services at  ...


CEO Compensation Analysis

Compensation vs. Market: John has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the US market.

Compensation vs Earnings: John's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.3yrs

Average Tenure

44yo

Average Age

Experienced Management: AIR's management team is considered experienced (3.3 years average tenure).


Board Age and Tenure

13.3yrs

Average Tenure

66.5yo

Average Age

Experienced Board: AIR's board of directors are seasoned and experienced ( 13.3 years average tenure).


Insider Trading

Insider Buying: AIR insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$42,04330 Sep 19
Eric Pachapa
EntityIndividual
Role
Chief Accounting Officer
VP, Controller & Chief Accounting Officer
Shares1,000
Max PriceUS$42.04
SellUS$2104 Jun 19
Peter Pace
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares0.64
Max PriceUS$32.59
SellUS$120,13802 Apr 19
Anthony Anderson
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares3,615
Max PriceUS$33.23
SellUS$1,161,60011 Jan 19
David Storch
EntityIndividual
Role
Chairman of the Board
Chairman of the Board
Shares30,000
Max PriceUS$38.72

Ownership Breakdown


Management Team

  • Terry Stinson (77yo)

    Executive Vice President

    • Tenure: 0yrs
    • Compensation: US$1.08m
  • Bob Regan (61yo)

    VP, General Counsel & Secretary

    • Tenure: 11.3yrs
    • Compensation: US$1.74m
  • John Holmes (42yo)

    CEO, President & Director

    • Tenure: 1.3yrs
    • Compensation: US$3.35m
  • Chris Jessup (41yo)

    Chief Commercial Officer & VP

    • Tenure: 2.3yrs
  • Nick Gross

    Senior VP of Government Programs

    • Tenure: 0yrs
  • Jason Secore

    VP & Treasurer

    • Tenure: 3.5yrs
  • Deepak Sharma

    President of International Supply Chain

    • Tenure: 3.5yrs
  • Brian Sartain

    SVP of Repair and Engineering Services

    • Tenure: 0yrs
  • Eric Pachapa (46yo)

    VP, Controller & Chief Accounting Officer

    • Tenure: 3.3yrs
    • Compensation: US$889.55k
  • Mike Gillen (33yo)

    VP & CFO

    • Tenure: 0.8yrs
    • Compensation: US$987.45k

Board Members

  • Marc Walfish (67yo)

    Independent Director

    • Tenure: 16.8yrs
    • Compensation: US$216.22k
  • David Storch (66yo)

    Chairman of the Board

    • Tenure: 14yrs
    • Compensation: US$397.48k
  • James Goodwin (75yo)

    Lead Director

    • Tenure: 0yrs
    • Compensation: US$246.22k
  • Ronald Woodard (76yo)

    Independent Director

    • Tenure: 15.3yrs
    • Compensation: US$217.80k
  • Jennifer Vogel (57yo)

    Independent Director

    • Tenure: 3.8yrs
    • Compensation: US$202.47k
  • Michael Boyce (71yo)

    Independent Director

    • Tenure: 14.2yrs
    • Compensation: US$206.78k
  • Peter Pace (73yo)

    Independent Director

    • Tenure: 8.8yrs
    • Compensation: US$206.22k
  • John Holmes (42yo)

    CEO, President & Director

    • Tenure: 1.3yrs
    • Compensation: US$3.35m
  • Patrick Kelly (64yo)

    Independent Director

    • Tenure: 13.3yrs
    • Compensation: US$204.97k
  • Tony Anderson (63yo)

    Independent Director

    • Tenure: 7yrs
    • Compensation: US$197.76k

Company Information

AAR Corp.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: AAR Corp.
  • Ticker: AIR
  • Exchange: NYSE
  • Founded: 1951
  • Industry: Aerospace and Defense
  • Sector: Capital Goods
  • Market Cap: US$1.422b
  • Shares outstanding: 34.44m
  • Website: https://www.aarcorp.com

Number of Employees


Location

  • AAR Corp.
  • One AAR Place
  • 1100 North Wood Dale Road
  • Wood Dale
  • Illinois
  • 60191
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
AIRNYSE (New York Stock Exchange)YesCommon StockUSUSDApr 1972
ARZDB (Deutsche Boerse AG)YesCommon StockDEEURApr 1972

Biography

AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide. The company operates in two segments, Aviation Services and Expeditionary Services. The Aviation  ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/17 23:30
End of Day Share Price2019/10/17 00:00
Earnings2019/08/31
Annual Earnings2019/05/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.