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Reasons to Add AAR Corp. (AIR) Stock to Your Portfolio Now
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AAR Corp.’s (AIR - Free Report) strong presence in the aerospace Maintenance, Repair and Overhaul (“MRO”) market, rising earnings estimates and low debt act as a tailwind for the company. Given its growth prospects, AIR makes for a solid investment option in the aerospace sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for AIR’s fiscal 2024 earnings per share, pegged at $3.30, suggests an improvement of 15.4% from fiscal 2023’s expected figure. The Zacks Consensus Estimate for AAR Corp.’s fiscal 2025 earnings per share has increased 0.5% to $4.10 per share over the past 60 days.
The Zacks Consensus Estimate for its fiscal 2024 revenues is pegged at $2.32 billion, which implies a rise of 16.7% from the fiscal 2023 expected sales figure.
The company delivered an average earnings surprise of 3.96% in the last four quarters.
Debt Position
AIR’s times interest earned ratio (TIE) at the end of the third quarter of fiscal 2024 was 3.6. The TIE ratio of more than 1 indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
Currently, AAR Corp.’s total debt to capital is 19.04%, much better than the industry’s average of 53.87%.
Liquidity
AIR’s current ratio at the end of the third quarter fiscal 2024 was 2.9, higher than the industry’s average of 1.54. The ratio, being greater than one, indicates AAR Corp.’s ability to meet its future short-term liabilities without difficulties.
AIR’s Expansion Focus on the MRO Market
AAR Corp. bought Trax in March 2023, thereby strengthening its position in the aerospace MRO sector. Trax provides fleet management software and aircraft maintenance and repair services for a wide range of maintenance tasks for a varied worldwide client base that includes airlines and MROs.
Additionally, the company completed the $725 million purchase of Triumph Group, Inc.'s Product Support Business in March 2024. The Product Support Business is a top global supplier of specialist MRO capabilities, which offers MRO services for structural components, engine and airframe accessories, interior refurbishing, wheels and brakes and other essential aircraft components for the commercial and defense industries.
Moreover, AIR broke ground on its airframe MRO facility expansions in both Miami and Oklahoma City in March and April 2024, respectively. Such initiatives are indicative of AAR Corp.’s efforts to expand its footprint in the aerospace MRO market.
Price Performance
In the past three months, AIR’s shares have rallied 19.3% compared with the industry’s growth of 5.3%.
Leidos’ long-term (three to five years) earnings growth rate is pegged at 11.1%. The Zacks Consensus Estimate for LDOS’ 2024 sales is pegged at $16.07 billion, which indicates an improvement of 4.1% from the 2023 reported sales figure.
BAE Systems’ long-term earnings growth rate is pegged at 12.2%. The Zacks Consensus Estimate for BAESY’s 2024 sales is pegged at $35.26 billion, which implies an improvement of 34.1% from the 2023 reported sales figure.
Safran’s long-term earnings growth rate is pegged at 34.7%. The Zacks Consensus Estimate for SAFRY’s 2024 sales is pegged at $29.93 billion, which indicates a rise of 45.5% from the 2023 reported sales figure.
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Reasons to Add AAR Corp. (AIR) Stock to Your Portfolio Now
AAR Corp.’s (AIR - Free Report) strong presence in the aerospace Maintenance, Repair and Overhaul (“MRO”) market, rising earnings estimates and low debt act as a tailwind for the company. Given its growth prospects, AIR makes for a solid investment option in the aerospace sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for AIR’s fiscal 2024 earnings per share, pegged at $3.30, suggests an improvement of 15.4% from fiscal 2023’s expected figure. The Zacks Consensus Estimate for AAR Corp.’s fiscal 2025 earnings per share has increased 0.5% to $4.10 per share over the past 60 days.
The Zacks Consensus Estimate for its fiscal 2024 revenues is pegged at $2.32 billion, which implies a rise of 16.7% from the fiscal 2023 expected sales figure.
The company delivered an average earnings surprise of 3.96% in the last four quarters.
Debt Position
AIR’s times interest earned ratio (TIE) at the end of the third quarter of fiscal 2024 was 3.6. The TIE ratio of more than 1 indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
Currently, AAR Corp.’s total debt to capital is 19.04%, much better than the industry’s average of 53.87%.
Liquidity
AIR’s current ratio at the end of the third quarter fiscal 2024 was 2.9, higher than the industry’s average of 1.54. The ratio, being greater than one, indicates AAR Corp.’s ability to meet its future short-term liabilities without difficulties.
AIR’s Expansion Focus on the MRO Market
AAR Corp. bought Trax in March 2023, thereby strengthening its position in the aerospace MRO sector. Trax provides fleet management software and aircraft maintenance and repair services for a wide range of maintenance tasks for a varied worldwide client base that includes airlines and MROs.
Additionally, the company completed the $725 million purchase of Triumph Group, Inc.'s Product Support Business in March 2024. The Product Support Business is a top global supplier of specialist MRO capabilities, which offers MRO services for structural components, engine and airframe accessories, interior refurbishing, wheels and brakes and other essential aircraft components for the commercial and defense industries.
Moreover, AIR broke ground on its airframe MRO facility expansions in both Miami and Oklahoma City in March and April 2024, respectively. Such initiatives are indicative of AAR Corp.’s efforts to expand its footprint in the aerospace MRO market.
Price Performance
In the past three months, AIR’s shares have rallied 19.3% compared with the industry’s growth of 5.3%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are Leidos Holdings, Inc. (LDOS - Free Report) , which sports a Zacks Rank #1 (Strong Buy), and BAE Systems (BAESY - Free Report) and Safran (SAFRY - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Leidos’ long-term (three to five years) earnings growth rate is pegged at 11.1%. The Zacks Consensus Estimate for LDOS’ 2024 sales is pegged at $16.07 billion, which indicates an improvement of 4.1% from the 2023 reported sales figure.
BAE Systems’ long-term earnings growth rate is pegged at 12.2%. The Zacks Consensus Estimate for BAESY’s 2024 sales is pegged at $35.26 billion, which implies an improvement of 34.1% from the 2023 reported sales figure.
Safran’s long-term earnings growth rate is pegged at 34.7%. The Zacks Consensus Estimate for SAFRY’s 2024 sales is pegged at $29.93 billion, which indicates a rise of 45.5% from the 2023 reported sales figure.