A month has gone by since the last earnings report for AAR (AIR). Shares have added about 17.3% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is AAR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
AAR Q2 Earnings Surpass Estimates, Sales Increase Year Over Year
AAR Corp. reported second-quarter fiscal 2026 adjusted earnings of $1.18 per share, which topped the Zacks Consensus Estimate of $1.02 by 15.7%. The bottom line also improved 31.1% from the year-ago quarter’s level of 90 cents.
The company reported GAAP earnings of 90 cents per share compared with 87 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 expenses.
AIR’s Total Sales
In the quarter under review, AAR generated net sales of $795.3 million. The reported figure beat the Zacks Consensus Estimate of $767 million by 3.7%. The figure also increased 15.9% from $686.1 million recorded in the year-ago quarter.
The year-over-year improvement can be attributed to the double-digit growth across new parts Distribution within the company's Parts Supply segment.
AAR: Segment Details
In the fiscal second quarter, sales in the Parts Supply segment totaled $353.6 million, up 29.2% year over year.
Repair & Engineering reported sales of $244.5 million, up 6.9% from the prior-year period’s level.
Integrated Solutions sales amounted to $175.8 million, up 7.6% from the year-ago quarter’s reported number.
Expeditionary Services recorded sales of $21.4 million, up 5.9% year over year.
AIR’s Operational Update
AIR’s adjusted operating margin increased from 9.2% to 10.2%, driven by higher volume and profitability in new parts distribution activities.
Selling, general and administrative expenses amounted to $88.7 million compared with $133.1 million a year ago.
Net interest expenses for the quarter totaled $18.6 million compared with $18.8 million in the year-ago period.
Financial Details of AAR
As of Nov. 30, 2025, AAR’s cash and cash equivalents amounted to $75.6 million compared with $96.5 million as of May 31, 2025.
The company’s long-term debt totaled $952.7 million as of Nov. 30, 2025, up from $968 million as of May 31, 2025.
In the first six months of fiscal 2026, net cash used from operating activities was $31.3 million against the net cash provided of $3.4 million in the year-ago period.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 11.01% due to these changes.
VGM Scores
At this time, AAR has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise AAR has a Zacks Rank #2 (Buy). We expect an above 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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