Reasons to Add AAR (AIR) Stock to Your Portfolio Right Now
AAR Corp. AIR provides various products and services to the aviation and defense industries worldwide. With strong organic and inorganic growth incentives and a solid solvency position, it witnesses strong performance.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a solid investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for AIR’s 2023 earnings per share is pegged at $3.46. The bottom-line estimate has moved up 1.8% in the past 60 days.
The consensus estimate for the current year sales is pinned at $2.21 billion, indicating year-over-year growth of 11%.
AAR has a trailing four-quarter average earnings surprise of 5.81%.
Debt Position
The total debt-to-capital of AIR is 19.70%, better than 50.91% registered by the industry. This indicates that the company has less debt than its peers, which is a positive sign.
AAR’s current ratio of 3.12 is better than the industry’s average of 1.52. This implies that the company has sufficient financial capability to pay its short-term debt obligations.
Improving MRO Market
The aging aircraft fleet in recent times has been fueling growth in the Used Serviceable Material (USM) market, which, in turn has the potential to reduce costs for the MRO sector. With the improvements observed in commercial aerospace lately, the MRO market is once again booming. To this end, AAR, being the largest independent supplier of USM globally, should benefit immensely from the growing MRO market.
To further strengthen its position in the market, AAR has agreed on expansion of its MRO relationship with United Airlines, through 2030. This will allow AIR to increase its narrow body maintenance capacity to provide United Airlines with a minimum of 10 lines of support across its Miami, Florida and Rockford, IL, MRO facilities.
Return on Equity (ROE)
ROE is a measure of a company’s financial performance and shows how it is utilizing its funds. AAR’s current ROE is 9.61%, better than the industry’s average of 7.22%, which indicates that the company is utilizing its funds more efficiently than its peers.
Price Performance
In the past year, AIR’s shares have rallied 40.4% compared with the industry’s 10% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks in the same industry are Hexcel Corp. HXL, AeroVironment Inc. AVAV and CurtissWright Corp. CW, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for HXL’s 2023 sales indicates year-over-year growth of 14.2%. It delivered an average earnings surprise of 16.14% in the past four quarters.
The consensus estimate for AVAV’s 2023 sales implies a year-over-year improvement of 23.2%. It delivered an average earnings surprise of 11.03% in the past four quarters.
The consensus mark for CW’s 2023 sales indicates a year-over-year increase of 8.1%. It delivered an average earnings surprise of 4.08% in the past four quarters.
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AAR Corp. (AIR) : Free Stock Analysis Report
AeroVironment, Inc. (AVAV) : Free Stock Analysis Report
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Curtiss-Wright Corporation (CW) : Free Stock Analysis Report
