AAR Corp Q2 sales beat estimates on strength in new parts distribution segment

Overview

• Aviation services provider's fiscal Q2 revenue rose 16%, beating analyst expectations

• Adjusted EPS for fiscal Q2 increased 31%, exceeding analyst estimates

• Company completed strategic acquisitions, boosting Parts Supply and Repair & Engineering segments

Outlook

• AAR Corp expects third-quarter sales growth of 20% - 22%

• Company anticipates full-year sales growth approaching 17%

• AAR Corp forecasts third-quarter adjusted operating margin of 9.8% - 10.1%

Result Drivers

• PARTS SUPPLY GROWTH - Sales in Parts Supply rose 29%, with new parts distribution achieving 32% organic growth, capturing market share

• GOVERNMENT SALES INCREASE - Sales to government customers increased 23%, driven by higher order volume for new parts distribution

• STRATEGIC ACQUISITIONS - Acquisitions of ADI and HAECO Americas expanded Parts Supply and Repair & Engineering segments, securing $850 mln in contracts

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 7 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the aerospace & defense peer group is "buy"

• Wall Street's median 12-month price target for AAR Corp is $90.00, about 2.2% above its January 5 closing price of $88.02

• The stock recently traded at 18 times the next 12-month earnings vs. a P/E of 19 three months ago

Press Release: ID:nPn86VHfga

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