It has been about a month since the last earnings report for AAR (AIR). Shares have lost about 9.3% 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? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for AAR Corp. before we dive into how investors and analysts have reacted as of late.
AAR Q4 Earnings Surpass Estimates, Sales Increase Year Over Year
AAR Corp. reported fourth-quarter fiscal 2025 adjusted earnings of $1.16 per share, which surpassed the Zacks Consensus Estimate of $1.00 by 16%. The bottom line also improved 31.8% from the year-ago quarter’s level of 88 cents per share.
The company reported GAAP earnings of 95 cents per share compared with 26 cents in the prior-year quarter.
The year-over-year improvement in the bottom line can be attributed to strong sales growth and lower selling, general and administrative charges.
The company reported fiscal 2025 adjusted earnings of $3.91 per share, which were higher than the year-ago figure of $3.33 on account of improved operating efficiency. The full-year bottom line also surpassed the Zacks Consensus Estimate of $3.75 per share.
AIR’s Total Sales
In the quarter under review, AAR generated net sales of $754.5 million. The reported figure surpassed the Zacks Consensus Estimate of $691 million by 9.2%. The figure also increased 14.9% from $656.5 million recorded in the year-ago quarter.
The company reported total revenues of $2.78 billion in fiscal 2025, which were higher than $2.32 billion in fiscal 2024. The full-year top line also surpassed the Zacks Consensus Estimate of $2.72 billion.
AAR: Segment Details
In the fiscal fourth quarter, sales in the Parts Supply segment totaled $305.5 million, up 17.4% year over year.
Repair & engineering reported sales of $222.6 million, up 2.9% from the prior-year period’s level.
Integrated solutions sales amounted to $200.1 million, up 22.4% from the year-ago quarter’s reported number.
Expeditionary Services recorded sales of $26.3 million, up 61.3% year over year.
AIR’s Operational Update
AIR’s adjusted operating margin increased from 9.3% to 10.5%, driven by strong growth and favorable mix in the Parts Supply segment.
Selling, general and administrative expenses amounted to $77.4 million compared with $94.8 million a year ago.
Net interest expenses for the quarter totaled $18.4 million compared with $18.7 million in the year-ago period.
Financial Details of AAR
As of May 31, 2025, AAR’s cash and cash equivalents amounted to $96.5 million compared with $85.8 million as of May 31, 2024.
The company’s long-term debt totaled $968 million as of May 31, 2025, down from $985.4 million as of May 31, 2024.
In fiscal 2025, net cash provided from operating activities was $36.1 million compared with net cash flow of $43.6 million in the year-ago period.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -6.25% due to these changes.
VGM Scores
Currently, AAR has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a score of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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 this revision 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 Corp. (AIR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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