Shares of AAR (AIR) have been strong performers lately, with the stock up 28.8% over the past month. The stock hit a new 52-week high of $108.36 in the previous session. AAR has gained 28.8% since the start of the year compared to the 39.6% gain for the Zacks Aerospace sector and the 46.6% return for the Zacks Aerospace - Defense Equipment industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on January 6, 2026, AAR reported EPS of $1.18 versus consensus estimate of $1.02.
For the current fiscal year, AAR is expected to post earnings of $4.85 per share on $3.2 in revenues. This represents a 24.04% change in EPS on a 15.23% change in revenues. For the next fiscal year, the company is expected to earn $5.61 per share on $3.44 in revenues. This represents a year-over-year change of 15.67% and 7.42%, respectively.
Valuation Metrics
Though AAR has recently hit a 52-week high, what is next for AAR? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
AAR has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 22X current fiscal year EPS estimates, which is not in-line with the peer industry average of 37.3X. On a trailing cash flow basis, the stock currently trades at 19.5X versus its peer group's average of 33.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this is even more important than the company's VGM Score. Fortunately, AAR currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if AAR passes the test. Thus, it seems as though AAR shares could have a bit more room to run in the near term.
How Does AIR Stack Up to the Competition?
Shares of AIR have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Moog Inc. (MOG.A). MOG.A has a Zacks Rank of #2 (Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Moog Inc. beat our consensus estimate by 14.29%, and for the current fiscal year, MOG.A is expected to post earnings of $9.95 per share on revenue of $4.2 billion.
Shares of Moog Inc. have gained 18.3% over the past month, and currently trade at a forward P/E of 28.94X and a P/CF of 23.84X.
The Aerospace - Defense Equipment industry is in the top 26% of all the industries we have in our universe, so it looks like there are some nice tailwinds for AIR and MOG.A, even beyond their own solid fundamental situation.
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AAR Corp. (AIR): Free Stock Analysis Report Moog Inc. (MOG.A): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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