AAR Corp.: Why I Believe This Aerospace Stock Can Fly Higher

Summary

• Despite underperforming the S&P 500, AAR's robust aftermarket demand and capacity expansions suggest significant upside, maintaining a buy rating with an $86 FY26 price target.
• Sales grew 20% in Q1 FY25, driven by commercial and defense sectors, though gross profit growth was limited by contract and customer mix.
• Risks include operating at capacity limits and lower USM sales due to airplane shortages, but efficiency improvements and capacity expansions offer growth potential.
• With no debt maturing until 2028 and potential for refinancing at better terms, AAR's financial outlook remains strong, supporting future growth.