On Jan 4, we issued an updated research report on the largest independent maintenance, repair and overhaul (“MRO”) provider in North America – AAR Corp. (AIR - Free Report) .
AAR Corp. provides various products and services to the aviation and defense industries worldwide. Recently, it reported second-quarter fiscal 2017 results, wherein earnings registered a year-over-year improvement. However, revenues were down from the year-ago tally.
The company is focused on getting rid of its debts and expects an uptrend in cash flow driven by strong fundamentals. It is reducing its debt level and repurchasing shares using proceeds from asset divestures.
Moreover, the company expects its supply chain to see strong growth and continued demand in MRO businesses, backed by a strong position in the thriving global aviation services market. The company continues to expand its MRO business footprint. In Dec 2016, it inaugurated the sixth MRO facility in Rockford, which will allow it to maintain every commercial aircraft up to and including the A380. The company’s MRO businesses are expected to see an improvement throughout the year.
Moreover, the company expects Aviation Services to benefit in fiscal 2017 from its strong position in the growing global aviation market. The company expects to see a favorable trend in both commercial and government, and defense customers for comprehensive supply chain and maintenance programs as these customers continue to look for ways to reduce operating costs.
On the flip side, the company operates in a highly competitive space and is subject to stringent government regulations. In addition, AAR Corp. is exposed to currency fluctuation risks due to its geographically expanded client base and operations beyond the U.S.
Adding to its woes, AAR Corp. generated nearly 39% of its fiscal 2016 revenues from government contracts, including defense deals. Though the current budget environment is conducive for defense players, any downward revision in the future may hurt the company’s top line. The U.S. government’s reduced role in Afghanistan as a result of troop drawdown might have an adverse impact on the company’s expeditionary airlift fleet operations.
Price Movement
AAR Corp.’s share price gained 31.5% in the last one year, outperforming the Zacks categorized Aerospace-Defense Equipment industry’s gain 14.1%. Note that the company is presently in a transformation process, focusing on its service business and selling off its large manufacturing operations. Its performance is broadly on par with the other major players in the same space like Raytheon Company , Ducommun Inc. (DCO - Free Report) and Spirit AeroSystems Holdings, Inc. (SPR - Free Report) , all of which have outperformed the industry.
Zacks Rank
AAR Corp. currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
On Jan 4, we issued an updated research report on the largest independent maintenance, repair and overhaul (“MRO”) provider in North America – AAR Corp. (AIR - Free Report) .
AAR Corp. provides various products and services to the aviation and defense industries worldwide. Recently, it reported second-quarter fiscal 2017 results, wherein earnings registered a year-over-year improvement. However, revenues were down from the year-ago tally.
The company is focused on getting rid of its debts and expects an uptrend in cash flow driven by strong fundamentals. It is reducing its debt level and repurchasing shares using proceeds from asset divestures.
Moreover, the company expects its supply chain to see strong growth and continued demand in MRO businesses, backed by a strong position in the thriving global aviation services market. The company continues to expand its MRO business footprint. In Dec 2016, it inaugurated the sixth MRO facility in Rockford, which will allow it to maintain every commercial aircraft up to and including the A380. The company’s MRO businesses are expected to see an improvement throughout the year.
Moreover, the company expects Aviation Services to benefit in fiscal 2017 from its strong position in the growing global aviation market. The company expects to see a favorable trend in both commercial and government, and defense customers for comprehensive supply chain and maintenance programs as these customers continue to look for ways to reduce operating costs.
On the flip side, the company operates in a highly competitive space and is subject to stringent government regulations. In addition, AAR Corp. is exposed to currency fluctuation risks due to its geographically expanded client base and operations beyond the U.S.
Adding to its woes, AAR Corp. generated nearly 39% of its fiscal 2016 revenues from government contracts, including defense deals. Though the current budget environment is conducive for defense players, any downward revision in the future may hurt the company’s top line. The U.S. government’s reduced role in Afghanistan as a result of troop drawdown might have an adverse impact on the company’s expeditionary airlift fleet operations.
Price Movement
AAR Corp.’s share price gained 31.5% in the last one year, outperforming the Zacks categorized Aerospace-Defense Equipment industry’s gain 14.1%. Note that the company is presently in a transformation process, focusing on its service business and selling off its large manufacturing operations. Its performance is broadly on par with the other major players in the same space like Raytheon Company , Ducommun Inc. (DCO - Free Report) and Spirit AeroSystems Holdings, Inc. (SPR - Free Report) , all of which have outperformed the industry.
Zacks Rank
AAR Corp. currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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