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As AAR Corp. (NYSE:AIR) announced its earnings release on 31 May 2019, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 6.1% next year against the higher past 5-year average growth rate of 27%. Presently, with latest-twelve-month earnings at US$84m, we should see this growing to US$89m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect AAR to keep growing?
The longer term expectations from the 6 analysts of AIR is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of AIR's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$84m and the final forecast of US$108m by 2022, the annual rate of growth for AIR’s earnings is 9.4%. This leads to an EPS of $3.15 in the final year of projections relative to the current EPS of $2.44. Margins are currently sitting at 4.1%, which is expected to expand to 4.6% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For AAR, I've put together three essential factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is AAR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AAR is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of AAR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.