AIR Outperforms Industry in the Past Year: How to Play the Stock?

AAR Corp. AIR stock has surged 66.3% in the past year, surpassing the 35.8% growth of the Zacks Aerospace-Defense Equipment industry. It has also outperformed the Zacks Aerospace sector’s growth of 31.3% and the S&P 500’s rise of 17.7%.

Other defense equipment stocks, such as Kratos Defense & Security Solutions KTOS and AeroVironment AVAV, have also outpaced the industry in the past year. Shares of KTOS have gained 201.5%, while shares of AVAV have rallied 57%.

With AIR’s recent rise in the market, some investors may be tempted to jump in quickly. However, it’s important to look closely at what’s driving this strong performance before making a decision. The main question is whether the company can sustain this momentum or if potential risks could slow its growth going forward. Taking a closer look can help investors reach a more balanced and well-informed conclusion.

Tailwinds for AIR

AIR’s recent performance has been supported by solid quarterly results and continued investment in operational and technology initiatives, which have helped sustain investor confidence. In January 2026, the company reported its second-quarter fiscal 2026 results, delivering revenue growth of 16% and a 31% increase in net adjusted earnings compared with the year-ago period.

AIR continues to enhance its market position through facility expansion and ongoing technology initiatives. The company has completed the expansion of its Airframe MRO facility in Oklahoma City, increasing capacity to meet growing demand from commercial and government customers, as well as MROs and OEMs. This added capacity is expected to support improved service delivery and long-term revenue growth.

AIR is also seeing positive momentum in its Trax business. Trax recently extended a multi-year contract with Air Atlanta Icelandic. After upgrading to Trax’s eMRO platform in 2024, the airline will now adopt eMobility and cloud hosting solutions. These additions are expected to improve maintenance efficiency, streamline operations and support regulatory compliance, strengthening AIR’s technology portfolio and recurring revenue base.

AIR: A Glance at Near-Term Estimates

The Zacks Consensus Estimate for AIR’s fiscal 2026 revenues indicates a solid improvement of 15.2% from the prior-year level. The estimate for its earnings also calls for a solid increase from the prior-year quarter.

The upward revision in its fiscal 2026 earnings estimate over the past 60 days reflects increasing analysts' confidence in its earnings growth prospects.

AIR Shares Are Trading at a Discount

AIR shares are trading at a discount, with its forward 12-month Price/Sales (P/S F12M) being 1.33X compared with its industry’s average of 12.48X.

Its industry peers, Kratos and AeroVironment, are trading at a premium in comparison with AIR. KTOS is trading at a P/S F12M of 9.64X, while AVAV is trading at a P/S F12M of 5.78X.

Liquidity Position of AIR

AIR has a current ratio of 2.85. The ratio, being more than one, indicates that the company possesses sufficient capital to pay off its short-term debt obligations.

Its industry peers, Kratos and AeroVironment, also maintain current ratios above one. Kratos has a current ratio of 4.30, while AeroVironment holds 5.08.

Conclusion

AAR has delivered strong share price gains over the past year, supported by solid earnings growth, expanding facilities, improving technology offerings and healthy demand trends. The company also benefits from a strong liquidity position and rising revenue and earnings estimates, reflecting growing confidence in its near-term outlook. In addition, its shares are trading at a discount compared with industry peers, which adds to its investment appeal.

Investors may consider adding this stock at current levels. AIR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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