A Look at AAR (AIR) Valuation After Recent Share Price Pullback

AAR (AIR) shares have tracked lower in recent trading, dipping around 2% on the day. The pullback turns some heads given the company’s steady run this year, as shares remain up more than 30% year-to-date.

See our latest analysis for AAR.

Even with today's small dip, AAR's share price is still up more than 30% year-to-date. This suggests that momentum is holding strong after a stretch of steady gains and a 1-year total shareholder return of 25%. The latest move might simply reflect investors locking in profits amid a strong longer-term uptrend.

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With impressive gains already booked, the key question now is whether AAR's current valuation leaves further upside for investors or if the market has already accounted for its future growth prospects. Is there still a buying opportunity?

Most Popular Narrative: 10% Undervalued

AAR’s most-followed narrative places the company’s fair value at $91 per share, above its recent closing price of $81.80. With momentum in the stock and impressive profitability forecasts, bulls are closely watching what could drive this view higher.

"The commercialization of additional MRO capacity in Oklahoma City and Miami, both already sold out before opening, positions AAR to capitalize on the expected long-term rise in global air travel and the need for ongoing maintenance of aging aircraft fleets, supporting robust revenue growth and improved earnings visibility."

Read the complete narrative.

What’s the secret behind this premium? Analysts’ forecasts are dialed up, hinging on major leaps in both profits and sales, plus a future earnings multiple that might surprise you. Want the real drivers behind that $91 target? Click through and get the entire story to see which bold assumptions power this upbeat scenario.

Result: Fair Value of $91 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, execution risks around AAR’s digital platform rollout and intensifying competition from major OEMs could still derail the bullish outlook for future gains.

Find out about the key risks to this AAR narrative.

Another View: Are the Valuation Ratios Sending a Warning?

While the fair value narrative paints AAR as undervalued, the story changes when you look at the company’s price-to-earnings ratio. At over 100 times earnings, AAR trades far richer than both the industry average of 39 and its peers at 44. Even compared to a fair ratio of 81, the gap is wide and signals a possible premium that is hard to ignore. Is the optimism already baked in, or could this leave little room for disappointment?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own AAR Narrative

Prefer a hands-on approach or want to challenge these perspectives? Dive in, explore the numbers, and craft your own take in just minutes. Do it your way.

A great starting point for your AAR research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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