AAR Corp. (AIR): A Bull Case Theory

Core Thesis - AAR Corp. is positioned as a strong player in the growing global aircraft maintenance, repair, and overhaul (MRO) market, driven by an aging fleet and increasing demand for aftermarket services [2][4] Company Overview - AAR Corp.'s share price was $81.60 as of December 1st, with trailing and forward P/E ratios of 104.01 and 18.87 respectively [1] - The company operates in three main segments: Parts Supply, Repair & Engineering, and Integrated Solutions, with a focus on high-margin services [3] Strategic Developments - The acquisition of Triumph Product Support in 2024 has enhanced AAR's component repair capabilities and shifted the business mix towards higher-margin Parts Supply [2][3] - AAR's PMA strategy strengthens its competitive position while maintaining relationships with OEM suppliers [4] Financial Performance - The company is experiencing significant margin expansion, with EBIT margins nearly doubling to 9.6% from pre-2020 levels [3] - Mid-term guidance indicates 5–10% organic sales growth and 10–15% EPS growth, with current execution tracking closer to 20% EPS growth over the next 2–3 years [4] Market Position - AAR holds a 10% market share in Parts Supply, benefiting from exclusive OEM partnerships and aftermarket reach [3] - Comparisons to peers suggest modest multiple expansion potential, but AAR's structural tailwinds and high-quality cash flows present an attractive investment opportunity [4]