AAR CORP. (AIR) Stock Forecast & Price Target

AAR Corp's financial performance demonstrates significant improvement across multiple segments, with the Expeditionary Services segment reporting a remarkable 79% year-over-year increase in EBITDA to $3.4 million, resulting in a 15.3% margin. Additionally, the company achieved a consolidated EBITDA of $28.1 million, reflecting a 1% year-over-year growth, while overall performance from other segments led to a robust 34% year-over-year increase in EBITDA to $43.8 million and a 13.8% margin. Furthermore, earnings per share (EPS) rose by 27% year-over-year to $1.08, surpassing consensus estimates by 10.2%, reinforcing AAR's favorable financial trajectory.

AAR Corp is expected to continue trading at a discount compared to its commercial aerospace manufacturing peers primarily due to lower margins and negative investor sentiment towards the commercial maintenance, repair, and overhaul (MRO) business. The company's Repair & Engineering segment experienced a slight decline in sales, raising concerns about growth potential amidst competitive pressures from larger companies and potential reductions in investments by OEMs and airlines. Furthermore, ongoing challenges in cost management within the MRO business have previously weighed on margins, contributing to an overall negative outlook for AAR’s stock.