CHICAGO, July 10, 2026, 16:08 (CDT)
AAR Corp. NYSE:AIR slipped 0.6% to $135.67 Friday, ending the week 5.5% under Monday’s close. The S&P 500 rose 0.42% in the session. Shares in the aviation aftermarket name are still up 81% over the last year, so investors are watching valuation more than the latest decline.
The price-to-earnings ratio for the stock is around 30. AAR reports its fiscal Q4 numbers after the bell on July 21. Volume on Friday was about 251,000 shares, or 54% of its normal 463,000-share average. That may point to a lack of conviction in the drop, but doesn’t prove it.
Analyst coverage on AAR is pretty thin, and the upside looks limited. Of the four analysts Google Finance tracked in the last three months, three rate the stock Buy, one says Hold. RBC’s Kenneth Herbert has a $125 target, which is 7.9% below where AAR closed Friday. Jefferies’ Sheila Kahyaoglu has a $150 target, pointing to 10.6% upside. The average target is $137.50—just 1.35% above the last close.
AAR lags far behind the bigger aerospace companies in size, but not in valuation. The company’s market cap is about a fourteenth of TransDigm Group Inc. NYSE:TDG, though AAR’s reported P/E is only about 3% less. Compared with StandardAero Inc. NYSE:SARO, AAR is 42% smaller by market value, but its multiple is just about 6% lower.
| Company or benchmark | Friday close | Friday move | Reported P/E | Market value |
|---|---|---|---|---|
| AAR Corp. NYSE:AIR | $135.67 | down 0.6% | 29.9 | $5.36 billion |
| StandardAero Inc. NYSE:SARO | $27.93 | off 0.5% | 31.7 | $9.31 billion |
| TransDigm Group Inc. NYSE:TDG | $1,291.35 | edged 0.3% lower | 30.9 | $75.16 billion |
| Industrial Select Sector SPDR Fund (NYSEARCA:XLI) | $181.92 | added 0.5% | — | — |
All eyes on the next report to see if softer growth still pushes profits higher. Adjusted operating margin was 10.2% last quarter. AAR told investors it expects 10.2% to 10.5% this quarter.
| Measure | Fiscal Q3 actual | Fiscal Q4 guidance | Investor read-through |
|---|---|---|---|
| Total sales growth | 25% | 19%-21% | Pace slows |
| Company-reported organic growth | 14% | 6%-8% | Midpoint drops 50% |
| Adjusted operating margin | 10.2% | 10.2%-10.5% | Flat or a touch higher |
AAR’s Q3 number is for organic adjusted sales growth; the Q4 number is for organic sales growth. The outlook doesn’t include Landing Gear sales or any deals closed in fiscal 2026.
AAR CEO John Holmes told investors in May the company was looking for “consistent above-market sales growth and further margin expansion.” Now, the midpoint of fourth-quarter organic growth is 7%, about half of Q3’s pace, so focus is shifting to margins. AAR CORP.
The balance sheet gives the company some room. Operating cash flow for the third quarter came in at $74.7 million. Net leverage, measured as net debt to trailing adjusted EBITDA, was 2.17x. Holmes said HAECO integration is “ahead of schedule,” while the ADI business is “exceeding our expectations.” PR Newswire
The peer comparison isn’t a clean valuation check—AAR’s business mix, debt load, and acquisition risks are different from rivals. The company’s latest quarterly filing spells out risks including integration delays, lack of skilled labor, contract overruns, and softer airline demand. If organic growth comes in under 6% or margins drop below 10.2%, analyst price targets won’t offer much of a floor. But if growth tops that range or the margin beats 10.5%, the case for downside gets weaker.
The stock slipped a bit in a thin Friday session, leaving the debate open. Shares are now set up for steady delivery – July 21 needs to prove that slower growth can still mean higher margins and more cash.
