AAR Corp. (AIR): A Bull Case Theory 

We came across a bullish thesis on AAR Corp. on Valueinvestorsclub.com by roojoo. In this article, we will summarize the bulls’ thesis on AIR. AAR Corp.’s share was trading at $81.60 as of December 1st. AIR’s trailing and forward P/E were 104.01 and 18.87 respectively according to  Yahoo Finance.

AAR Corp. (AIR) is emerging as a compelling quality-play in the growing global aircraft maintenance, repair, and overhaul (MRO) market, benefiting from an aging global fleet and rising demand for aftermarket services. The transformative 2024 acquisition of Triumph Product Support enhanced AAR’s component repair capabilities, accelerated organic growth, and shifted the business mix toward higher-margin Parts Supply, while providing a foundation to become the industry’s #2 player in Parts Manufacturer Approval (PMA) parts behind Heico.

This strategic pivot, combined with $10 million in synergies, new hangar capacity, and the disposal of a break-even landing gear overhaul business, is driving substantial margin expansion, with EBIT margins nearly doubling to 9.6% from pre-2020 levels. AAR operates across three main segments: Parts Supply, Repair & Engineering, and Integrated Solutions, with the latter including the high-growth Trax ERP system, which offers significant cross-selling opportunities to airlines. Parts Supply, where AAR holds a 10% market share, benefits from exclusive OEM partnerships and aftermarket reach, while Repair & Engineering sees higher-value, high-margin engine component work accelerate post-Triumph.

The company’s multi-pronged PMA strategy further strengthens its competitive positioning without alienating OEM suppliers. With mid-term guidance of 5–10% organic sales growth and 10–15% EPS growth, execution is currently tracking closer to 20% EPS growth over the next 2–3 years. Deleveraging toward a Net Debt/EBITDA target of 2.0–2.5x creates room for buybacks and accretive M&A. Comparisons to peers such as VSE Corp. suggest modest multiple expansion potential, but even without rerating, AAR’s structural tailwinds, margin improvement, and high-quality cash flows provide an attractive risk/reward profile, making the stock a compelling investment for those seeking exposure to a consolidating and high-barrier MRO market.

Previously we covered a bullish thesis on TransDigm Group Incorporated (TDG) by Summit Stocks in May 2025, which highlighted its dominant aerospace components, strong aftermarket exposure, and pricing power. The company’s stock price has depreciated approximately by 3.57% since our coverage. The thesis still stands as TDG remains a high-margin, recurring revenue compounder. Roojoo shares a similar perspective but emphasizes AAR Corp.’s MRO expansion and margin improvement.

AAR Corp. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held AIR at the end of the second quarter which was 22 in the previous quarter. While we acknowledge the risk and potential of AIR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AIR and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.