AAR (AIR) Up 0.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for AAR (AIR). Shares have added about 0.2% in that time frame, outperforming the S&P 500.
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 most recent earnings report in order to get a better handle on the important catalysts.
AAR Corp. Q4 Earnings Beat Estimates, Sales Rise Y/Y
AAR Corp. reported fourth-quarter fiscal 2023 adjusted earnings of 83 cents per share, which surpassed the Zacks Consensus Estimate of 77 cents by 7.8%. Earnings surged 15% from the year-ago quarter.
The company reported GAAP earnings per share (EPS) of 66 cents, flat with the prior-year quarter.
For the full-year fiscal 2023, AAR reported adjusted earnings of $2.86 per share, up 20% from $2.38 in fiscal 2022. The reported figure beat the Zacks Consensus Estimate of $2.85 per share by 0.4%.
Total Sales
In the quarter under review, AAR generated net sales worth $553.3 million. The reported figure surpassed the Zacks Consensus Estimate by 4.5% and increased 16.5% from the $474.9 million recorded in the year-ago quarter.
For fiscal 2023, AAR reported total sales of $1.99 billion, which beat the Zacks Consensus Estimate by 1%. The reported figure also increased 9.3% from the $1.82 billion recorded in fiscal 2022.
Segment Details
In the fiscal fourth quarter, sales in the Aviation Services segment totaled $529.9 million, up 17% year over year.
Expeditionary Services recorded sales of $23.4 million, up 0.9% from $23.2 million in the year-ago quarter.
Operational Update
The adjusted gross profit margin in the reported quarter improved to 19.5% from 18.6% in the prior-year quarter. The margin expansion was a result of the favorable impacts of the company’s efforts to reduce costs and increase operational efficiency.
SG&A expenses rose 24.4% to $70.8 million in the fiscal fourth quarter. The adjusted operating margin expanded to 7.8% from 7% in the prior-year quarter, driven by growth in commercial sales. AIR incurred net interest expenses of $4.7 million in the fiscal fourth quarter compared with $0.6 million in the year-ago quarter.
Financial Details
As of May 31, 2023, AAR’s cash and cash equivalents amounted to $68.4 million compared with $53.5 million as of May 31, 2022.
The company reported long-term debt of $269.7 million as of May 31, 2023, up from $98.9 million as of May 31, 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
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 A on the value side, putting it in the top 20% 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 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AAR Corp. (AIR) : Free Stock Analysis Report
