Company Overview - AAR Corp., based in Wood Dale, IL, provides products and services to the aviation and defense industries globally, with principal customers including Boeing and Airbus [12] - The company operates in over 20 nations and reports through four segments: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services [12] Investment Highlights - AAR Corp. is currently rated 1 (Strong Buy) on the Zacks Rank, indicating strong investment potential [13] - The company has a VGM Score of A, suggesting it has attractive value, growth, and momentum characteristics [13] - AAR Corp. has a Momentum Style Score of A, with shares increasing by 15.9% over the past four weeks [13] - Recent upward revisions in earnings estimates by two analysts for fiscal 2025 have led to an increase in the Zacks Consensus Estimate by $0.14 to $3.77 per share [13] - The company boasts an average earnings surprise of 3.9%, indicating a history of exceeding earnings expectations [13] Conclusion - With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, AAR Corp. is positioned as a strong candidate for investors seeking growth opportunities in the aerospace sector [14]

Group 1 - Momentum investing contrasts with the traditional strategy of "buy low and sell high," focusing instead on "buying high and selling higher" [1] - Identifying the right entry point for fast-moving stocks can be challenging, as they may lose momentum if future growth does not justify their high valuations [1] - Investing in bargain stocks that have recently shown price momentum may be a safer strategy [2] Group 2 - AAR (AIR) is highlighted as a strong candidate for investment, having experienced a price increase of 15.9% over the past four weeks [3] - AIR has gained 14.8% over the past 12 weeks, indicating its ability to deliver positive returns over a longer timeframe [4] - AIR has a Momentum Score of A, suggesting it is an opportune time to invest in the stock [5] Group 3 - AIR has received a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates, which typically attract more investor interest [6] - The stock is currently trading at a Price-to-Sales ratio of 0.98, indicating it is reasonably valued at 98 cents for each dollar of sales [6] - AIR is positioned for significant growth potential, supported by its fast-paced momentum characteristics [7] Group 4 - There are additional stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting further investment opportunities [7] - Zacks offers over 45 Premium Screens tailored to different investing styles, which can assist in identifying winning stock picks [8]

Core Viewpoint - AAR Corp is a leading independent aviation services provider, reporting significant revenue growth and margin expansion, driven by strong demand in both commercial and government sectors [2][5][7]. Financial Performance - AAR reported fiscal Q2 2025 EPS of 90 cents, exceeding consensus estimates by 5 cents, with revenues increasing 30% YoY to $686.1 million, surpassing the $654.47 million consensus [2]. - Organic growth accelerated to 12% YoY from 6% in the previous quarter, with adjusted EBITDA margins rising to 11.4% from 10.1% YoY [2][4]. Segment Performance - The Parts and Supply business experienced 20% YoY sales growth, driven by new parts distribution and improved availability of used serviceable materials [4]. - Repair & Engineering sales surged 57% YoY, attributed to contributions from acquisitions and efficiency gains, with commercial customers now accounting for 73% of consolidated sales [5]. Business Developments - AAR secured new multi-year agreements for engine parts distribution and extended contracts with major clients, including Singapore Airlines [6]. - The company plans to divest its Landing Gear Overhaul business for $51 million as part of its portfolio optimization strategy [6]. Future Outlook - AAR's CEO anticipates continued strong sales growth and further margin expansion in the second half of fiscal year 2025, driven by growth in Parts Supply and synergies from recent acquisitions [7]. - The company expects margins to improve further in fiscal year 2026 as it expands its higher-margin Product Support business [7]. Stock Analysis - AAR's stock is currently in a symmetrical triangle pattern, with a price target of $81.00, indicating a potential upside of approximately 19.84% [10]. - The stock has a low short interest of 1.71% and is rated as a "Buy" by analysts, although it is not among the top recommendations from leading analysts [3][10][11].

Core Viewpoint - Institutional Shareholder Services (ISS) has recommended that Air Products shareholders vote for the election of Mantle Ridge nominees and against the company’s current nominees, highlighting the need for a reconstituted board to address succession planning and strategic oversight issues [1][2][3]. Group 1: Board Composition and Recommendations - ISS recommends shareholders vote "FOR" Mantle Ridge nominees Andrew Evans, Paul Hilal, and Dennis Reilley, and states that Tracy McKibben is well qualified to serve on the board [1][2]. - ISS advises shareholders to vote "WITHHOLD" on company nominees Seifi Ghasemi, Charles Cogut, and Edward L. Monser, emphasizing the need for change in board leadership [1][3]. - Mantle Ridge believes that a refreshed board with its nominees would be better positioned to lead a credible CEO succession process and create long-term value for shareholders [1][2]. Group 2: Performance and Strategic Concerns - Air Products has experienced material underperformance over the last five years, with a decline in return on capital and total shareholder return (TSR) significantly lagging behind peers and the broader market [3][5]. - The company's capital deployment strategy, which includes investments in coal gasification and clean hydrogen projects, has introduced risks that have negatively impacted investor sentiment and financial performance [3][5]. - ISS noted that the current board's oversight of strategy and succession planning has been inadequate, leading to a lack of a credible succession plan for the CEO position [4][5]. Group 3: CEO Succession and Governance Issues - The current board has ceded control of the CEO succession process to Ghasemi, resulting in a lack of transparency and credibility regarding succession planning [5][11]. - The board's independent members have not effectively managed the succession process, raising concerns about their ability to oversee Ghasemi's potential successor [5][11]. - Mantle Ridge argues that the removal of Ghasemi from the board would facilitate a fresh assessment of leadership and improve the timing for a CEO transition [5][11].

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores are designed to complement the Zacks Rank, providing additional metrics for stock selection [2] Zacks Style Scores Overview - Stocks are rated A, B, C, D, or F based on value, growth, and momentum characteristics, with higher scores indicating better chances of outperforming the market [3] - The Style Scores are categorized into four types: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5][6] Value Score - Focuses on identifying undervalued stocks using ratios like P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - Analyzes projected and historical earnings, sales, and cash flow to identify stocks with sustainable growth potential [4] Momentum Score - Utilizes price trends and earnings estimate changes to identify favorable times for investing in high-momentum stocks [5] VGM Score - Combines the three Style Scores to highlight stocks with attractive value, strong growth forecasts, and promising momentum [6] Zacks Rank Integration - The Zacks Rank leverages earnings estimate revisions to guide investors in building successful portfolios [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] Stock to Watch: AAR Corp. - AAR Corp. operates in the aviation and defense industries, serving major clients like Boeing and Airbus, and has a global presence in over 20 countries [11] - Currently rated 2 (Buy) with a VGM Score of A, AAR Corp. is projected to achieve year-over-year earnings growth of 12.6% for the current fiscal year [12] - The company has seen positive earnings estimate revisions and an average earnings surprise of 3.9%, making it a strong candidate for growth investors [12][13]

Group 1 - AAR (AIR) has shown strong year-to-date performance, returning approximately 9.5%, significantly outperforming the average return of 1% for the Aerospace sector [4] - The Zacks Rank for AAR is 2 (Buy), indicating a favorable outlook based on earnings estimate revisions and improving earnings outlooks [3] - Over the past 90 days, the Zacks Consensus Estimate for AAR's full-year earnings has increased by 3.2%, reflecting improved analyst sentiment [4] Group 2 - AAR is part of the Aerospace - Defense Equipment industry, which consists of 26 individual stocks and currently ranks 36 in the Zacks Industry Rank [6] - The Aerospace - Defense Equipment industry has experienced an average gain of 34.9% year-to-date, indicating that AAR is slightly underperforming its industry [6] - Another stock in the Aerospace sector, Woodward (WWD), has also outperformed the sector with a year-to-date return of 9.4% and a Zacks Rank of 2 (Buy) [5]

Glass Lewis' Recommendations - Glass Lewis recommends shareholders vote "WITHHOLD" on Air Products' nominees Charles Cogut, Lisa A Davis, Seifi Ghasemi, and Edward L Monser [1] - Glass Lewis supports all four of Mantle Ridge's director nominees, stating they provide a clear, credible, and proportionate alternative [2][13] - Glass Lewis finds a compelling case for change at Air Products due to years of poor performance, high-cost strategic expeditions, and a faulty succession effort [7][13] Air Products' Performance and Governance Issues - Air Products has generated subpar value for investors due to its capital-intensive non-core strategy [7] - The board has overseen a faulty succession effort, leaving CEO Seifi Ghasemi in an indefinite position of influence [7][13] - The board's relationship with Ghasemi suggests it operates at the direction of the senior executive, undermining governance [16] - Air Products' capital allocation and execution across multiple challenged projects have been poor [9] Mantle Ridge's Nominees and Strategy - Mantle Ridge's nominees are highly qualified, with relevant industry expertise and experience in capital allocation, renewable energy, and energy transition [15] - Paul Hilal is positioned as a shareholder advocate with strong familiarity with Air Products and the industrial gas sector [15] - Dennis Reilley, former CEO of Praxair, brings substantial industry expertise and operational experience [15] - Mantle Ridge's strategy aims to restore performance, fix capital allocation missteps, and ensure long-term leadership stability [13] Air Products' Strategic and Succession Challenges - Air Products' two-pillar growth strategy has faced scrutiny due to delays, scale revisions, and an inability to de-risk projects [16] - The board's succession process, ongoing since January 2023, is criticized for its lengthy timeline and lack of clarity on Ghasemi's future role [16] - The board's recent actions appear reactive and indicative of lax legacy oversight, with disingenuous claims of credit for performance gains [19] Mantle Ridge's Position and Engagement - Mantle Ridge, an engaged long-term owner-steward, holds approximately $1.3 billion of Air Products' common shares [13] - The firm has a history of constructive engagement with companies to create durable long-term value [17] - Mantle Ridge urges shareholders to vote the BLUE proxy card "FOR" its four director nominees and "WITHHOLD" on Air Products' nominees [4][13]

Core Viewpoint - AAR (AIR) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Recent Performance and Outlook for AAR - For the fiscal year ending May 2025, AAR is expected to earn $3.64 per share, reflecting a 9.3% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for AAR has increased by 0.1%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - AAR's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Insights - AAR Corp. reported adjusted earnings of 90 cents per share for Q2 fiscal 2025, exceeding the Zacks Consensus Estimate of 83 cents by 8.4% and showing an 11.1% improvement year-over-year [1] - The company experienced a GAAP loss of 87 cents per share, contrasting with earnings of 67 cents in the same quarter last year [1] Financial Performance - AAR generated net sales of $686.1 million in the quarter, surpassing the Zacks Consensus Estimate of $652.6 million by 5.1% and increasing 25.8% from $545.4 million in the prior-year quarter [3] - The growth in sales was driven by organic growth and increased commercial and government sales [3] Segment Performance - Parts Supply segment sales reached $273.7 million, up 20.3% year-over-year [4] - Repair & Engineering segment reported sales of $228.8 million, a significant increase of 57.4% from the previous year [4] - Integrated Solutions sales amounted to $163.4 million, reflecting a 4.3% increase year-over-year [4] - Expeditionary Services recorded sales of $20.2 million, up 27.8% from the prior-year period [4] Operational Metrics - Adjusted operating margin improved from 8.1% to 9.2%, primarily due to enhanced profitability in the Repair & Engineering segment [5] - Selling, general, and administrative expenses rose to $133.1 million compared to $65.7 million a year ago [5] - Net interest expenses for the quarter totaled $18.8 million, up from $5.6 million in the year-ago period [5] Financial Position - As of November 30, 2024, AAR's cash and cash equivalents were $61.7 million, down from $85.8 million as of May 31, 2024 [6] - Long-term debt increased to $986.7 million from $985.4 million as of May 31, 2024 [6] - Net cash flow from operating activities for the first six months of fiscal 2025 was $3.4 million, compared to a cash outflow of $1.3 million in the same period last year [6]

Financial Data and Key Metrics - No specific financial data or key metrics changes are provided in the content [1][2][3][4][5] Business Line Data and Key Metrics - No specific business line data or key metrics changes are provided in the content [1][2][3][4][5] Market Data and Key Metrics - No specific market data or key metrics changes are provided in the content [1][2][3][4][5] Company Strategy and Industry Competition - No specific details on company strategy, development direction, or industry competition are provided in the content [1][2][3][4][5] Management Commentary on Operating Environment and Future Outlook - The company includes forward-looking statements in its comments, which involve risks and uncertainties that could cause actual results to differ materially from expectations [3] - The company assumes no obligation to update forward-looking statements to reflect future circumstances or events [3] Other Important Information - The call includes discussions of non-GAAP financial information, with a reconciliation to GAAP measures provided in the earnings release [4] Q&A Session - No Q&A session details are provided in the content [1][2][3][4][5]