AIR NYSE Earnings call

AAR Corp. (AIR) · Q2 2026 results and valuation

Share price: $114.17 · 2026-11-11

Results Q2 2026 vs Q1 2026 · previous quarter · fiscal Q4 2026 · published 21 Jul 2026 and 24 Mar 2026

Net income down 25.4% on the previous quarter. Management sounded cautious, though noticeably more positive answering analysts.

Only a basic analysis is available for this company at the moment.

1 · Numbers

−25.4%

Net income vs Q1 2026

Outlook given

Net income 50.7M vs 68.0M

Revenue +9.8%

Against the same quarter last year (Q2 2025) it is +49.1%, so the move on last quarter looks seasonal or timing-related rather than a trend.

2 · How management spoke

Cautious

Among the least upbeat of all company calls

Answers to analysts: very upbeat, and more positive than the script.

Last call it was different: script and answers matched.

3 · What stood out

Key theme

The adjusted EBITDA margin reached 13% excluding the legacy commercial Program segment, demonstrating the company's ability to achieve its three-year…

Valuation

Is AAR Corp. undervalued?

Reverse DCF. Free cash flow from the last full fiscal year (2026-05-31), grown for 10 years, discounted back, plus a terminal value. “Implied growth” is the rate the current price assumes.

At 18.4% growth a year (3-year revenue growth), the model's fair value is $40.01 a share — the stock trades 185% above it. Today's price assumes 30.2% growth a year.

Current price

$114.17

close of 2026-11-11

Market implies growth of i

+30.2% for 10 yrs

Fair value / share

$40.01

Buy below

$30.01

Price vs fair value

Overvalued 185%

Price vs buy-below price

Overvalued >200%

FCF growth / yr i Discount rate i Terminal growth i Margin of safety i

Official channels

The company's own website and social media accounts.

Read between the lines

Guidance

The company expects the HAECO Americas acquisition to reach margins consistent with other airframe businesses because the integration is pacing ahead of schedule.

Source quote
“As mentioned previously, the integration of the HAECO Americas acquisition is pacing ahead of schedule, and we expect the acquisition to reach margins consistent with our other airframe...”
Guidance

Air expects total sales growth, excluding the legacy commercial Programs segment, to be 21% to 23% in Q1.

Source quote
“Specifically, in Q1, we are expecting total sales growth, excluding the legacy commercial Programs segment to be 21% to 23%.”
Figure

Total sales reached a record $928 million, growing 26% year-over-year with 13% organic growth, indicating an increase in scale and performance.

Source quote
“Total sales in the quarter were a record $928 million and grew 26% year-over-year, including 13% organic growth.”
Fading

Adjusted operating income grew by 31% this quarter, supporting momentum across repair and software platform activities as total sales grew 25%.

Source quote
“Second, we continued our momentum in the quarter and delivered 25% growth in total sales, 31% growth in adjusted operating... . We saw growth across each of our parts, repair and software platform activities in the quarter.”

Tone

How upbeat the language was, compared with other companiesi. Dot: Q2 2026. Ring: Q1 2026.

Prepared remarks Cautious (was upbeat)

Answers to analysts Very upbeat (was typical)

Management was more positive answering analysts than in its script — usually a sign it was comfortable with the details it was asked about.

Sentences that drove the tone

“The decline in revenue was driven by reduced activity on our WASS program supporting the State Department.”

“And I would say, in particular, driving lower accounts receivable days and greater inventory turns, and we want to continue to make year-over-year progress in those two metrics.”

“And if I think about some of our largest heavy maintenance customers, we could be doing $100 million a year business or more and low single-digit million business on the...”

Full figures

USD · SEC EDGAR XBRL (10-Q, period end 2026-05-31)

Metric	Q2 2026period end 2026-05-31	Q1 2026period end 2026-02-28	Change	Q2 2025	YoY
Revenue	928.0M	845.1M	+9.8%	754.5M	+23.0%
Gross profit	176.7M	154.7M	+14.2%	150.2M	+17.6%
Operating income	57.7M	93.1M	−38.0%	47.6M	+21.2%
Net income	50.7M	68.0M	−25.4%	34.0M	+49.1%
EPS	1.27	1.71	−25.7%	0.96	+32.3%
P/E today 20.8	23.2	25.8	−2.6	175.5	−152.3

Topics

Most discussed now

AAR's strong cash flow in the quarter helped us further reduce its net leverage.
New AAR's two-way exclusive distribution model has gained tremendous traction in the model in the market.
Commercial distribution grew 28% organically and government distribution grew 7% organically despite strong government sales in the year…
AAR expects the legacy commercial programs business to wind down ratably over the next three to four years, and it...
AAR looks at Woodward in general as a potentially large partner for it over time, and it is encouraged that it has...

Faded since Q1 2026

Fading Total sales increase included 14% organic adjusted sales growth led by 36% organic growth in AAR's new parts distribution activity.
Fading At the same time, AAR is also making difficult decisions around the size of the workforce because it wants to size...
Fading While some customers may make modest capacity adjustments, at this time, AAR is not anticipating any meaningful impact to their...
Fading AAR's focused business model is driving growth that is delivering durable results in both commercial and government end markets as...

Latest announcements

Official filings, newest first.

2026-09-29 Material agreement; Unregistered share sale; Regulation FD disclosure · SEC 8-K
2026-09-28 Results of operations · SEC 8-K
2026-09-24 Director or officer change; Shareholder vote results · SEC 8-K
2026-07-24 Director or officer change · SEC 8-K
2026-07-21 Results of operations · SEC 8-K
2026-05-12 Regulation FD disclosure · SEC 8-K
2026-05-06 Regulation FD disclosure · SEC 8-K
2026-04-24 Regulation FD disclosure; Other events · SEC 8-K