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AAR (AIR) Down 6.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for AAR (AIR - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is AAR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
AAR Q1 Earnings Surpass Estimates, Sales Increase Year Over Year
AAR Corp. reported first-quarter fiscal 2025 adjusted earnings of 85 cents per share, which surpassed the Zacks Consensus Estimate of 82 cents by 3.7%. The bottom line improved 9% from the year-ago quarter’s level.
The company reported GAAP earnings per share (EPS) of 50 cents against a loss of 2 cents in the prior-year quarter.
The year-over-year improvement in the bottom line can be attributed to improved sales growth as well as operating income.
Total Sales
In the quarter under review, AAR generated net sales of $661.7 million. The reported figure beat the Zacks Consensus Estimate of $646 million by 2.5% and increased 20.4% from $549.7 million recorded in the year-ago quarter.
The year-over-year improvement can be attributed to the acquisition of the Product Support business and organic growth.
Segment Details
In the fiscal first quarter, sales in the Parts Supply segment totaled $249.7 million, up 5.4% year over year.
Repair & Engineering reported sales of $217.6 million, up 58.3% from the prior-year period’s level.
Integrated Solutions sales amounted to $168.9 million, up 8.1% from the year-ago quarter’s reported numbers.
Expeditionary Services recorded sales of $25.5 million, up 33.5% year over year.
Operational Update
The company’s gross profit margin deteriorated 70 basis points to 17.7% from the prior-year quarter’s level.
AIR’s adjusted operating margin increased from 7.3% to 9.1%, driven by a favorable contribution from the recently acquired Product Support business as well as improved execution.
Selling, general and administrative expenses amounted to $75.9 million compared with $74.7 million a year ago.
Net interest expense for the quarter totaled $18.3 million compared with $5.4 million in the year-ago period.
Financial Details
As of Aug. 31, 2024, AAR’s cash and cash equivalents amounted to $49.3 million compared with $85.8 million as of May 31, 2024.
The company’s long-term debt totaled $981 million as of Aug. 31, 2024, down from $985.4 million as of May 31, 2024.
As of Aug. 31, 2024, net cash outflow from operating activities amounted to $18.6 million compared with $18.7 million in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -9.34% due to these changes.
VGM Scores
Currently, AAR has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise AAR has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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AAR (AIR) Down 6.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for AAR (AIR - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is AAR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
AAR Q1 Earnings Surpass Estimates, Sales Increase Year Over Year
AAR Corp. reported first-quarter fiscal 2025 adjusted earnings of 85 cents per share, which surpassed the Zacks Consensus Estimate of 82 cents by 3.7%. The bottom line improved 9% from the year-ago quarter’s level.
The company reported GAAP earnings per share (EPS) of 50 cents against a loss of 2 cents in the prior-year quarter.
The year-over-year improvement in the bottom line can be attributed to improved sales growth as well as operating income.
Total Sales
In the quarter under review, AAR generated net sales of $661.7 million. The reported figure beat the Zacks Consensus Estimate of $646 million by 2.5% and increased 20.4% from $549.7 million recorded in the year-ago quarter.
The year-over-year improvement can be attributed to the acquisition of the Product Support business and organic growth.
Segment Details
In the fiscal first quarter, sales in the Parts Supply segment totaled $249.7 million, up 5.4% year over year.
Repair & Engineering reported sales of $217.6 million, up 58.3% from the prior-year period’s level.
Integrated Solutions sales amounted to $168.9 million, up 8.1% from the year-ago quarter’s reported numbers.
Expeditionary Services recorded sales of $25.5 million, up 33.5% year over year.
Operational Update
The company’s gross profit margin deteriorated 70 basis points to 17.7% from the prior-year quarter’s level.
AIR’s adjusted operating margin increased from 7.3% to 9.1%, driven by a favorable contribution from the recently acquired Product Support business as well as improved execution.
Selling, general and administrative expenses amounted to $75.9 million compared with $74.7 million a year ago.
Net interest expense for the quarter totaled $18.3 million compared with $5.4 million in the year-ago period.
Financial Details
As of Aug. 31, 2024, AAR’s cash and cash equivalents amounted to $49.3 million compared with $85.8 million as of May 31, 2024.
The company’s long-term debt totaled $981 million as of Aug. 31, 2024, down from $985.4 million as of May 31, 2024.
As of Aug. 31, 2024, net cash outflow from operating activities amounted to $18.6 million compared with $18.7 million in the year-ago period.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -9.34% due to these changes.
VGM Scores
Currently, AAR has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise AAR has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.