AAR CORP. (AIR) Stock Forecast & Price Target

AAR Corp has demonstrated strong financial performance across its segments, most notably with a 79% year-over-year increase in EBITDA within the Expeditionary Services segment, achieving a margin of 15.3%. The consolidated F1Q26 results reflected a 12% increase in sales to $739 million, primarily driven by a 27% surge in the parts supply segment, which also exceeded consensus estimates significantly. Additionally, AAR’s strong earnings per share growth of 27% to $1.08, beating consensus estimates, along with a favorable increase in operating margins, provides a robust foundation for a positive outlook on the company’s stock.

AAR Corp is anticipated to continue trading at a discount compared to its commercial aftermarket (AM) peers, attributed to lower margins and a prevailing investor sentiment that views the commercial maintenance, repair, and overhaul (MRO) business as less appealing. The company's Repair & Engineering segment has experienced a slight sales decline, despite an organic growth of 8%, further highlighting the competitive pressures from larger firms within the industry. Additionally, management's focus on execution and cost management has historically posed challenges to margin improvement, indicating a potentially challenging financial outlook ahead.