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Category: Stock Market and AAR
Date: 26 September 2019 Stock Price: $45.32 We take a look at the 1st quarter earnings release of their 2020 fiscal year of aviation services and parts supplier, AAR.
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About AAR
AAR is a global aftermarket solutions company that employs more than 6,000 people in over 20 countries. Based in Wood Dale, Illinois, AAR supports commercial aviation and government customers through two operating segments: Aviation Services and Expeditionary Services. AAR's Aviation Services include parts supply; OEM parts distribution; supply chain programs; customer fleet management and operations; aircraft maintenance, repair and overhaul; engineering services and component repair. AAR's Expeditionary Services include mobility systems; command and control centers in support of military and humanitarian missions; and composite manufacturing operations.
The image below shows a business overview of AAR (NYSE: AIR)
The image below shows a business overview of AAR (NYSE: AIR)
Overview of AAR's latest earnings report
The numbers we are interested in (for the quarter):
- Sales: $541.5 million (up from $466.3 million from the same quarter of the previous year)
- Revenue increased by 16.12% over the last 12 months
- Cost of sales: $459.9 million (down from $15.1 million for the same quarter of the previous year)
- Cost of sales increased by 16.4% over the last 12 months
- Net income: $4.4 million (down from $87.476 million for the same quarter of the previous year)
- Diluted income per share: $0.13 (down from $0.43 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 35 million (down from 35.1 million for the same quarter of the previous year)
- Cash and cash equivalents:$39.9 million
- Cash and cash equivalents per share: $1.14
- Cash and cash equivalents makes up 2.51% of AAR's market capital
- Cash and cash equivalents makes up 2.37% of AAR's total assets
- Accounts receivable: $193.7 million
- Accounts receivable makes up 11.7% of AAR's total assets
- Inventories: $553.6 million
- Inventories makes up 32.9% of AAR's total assets
- Stockholders equity of AAR: $909.5 million
- Stockholders equity per share: $25.98
- AAR is trading at 1.74 times its stockholders equity which is outside the expected range of between 2 and 4 which most companies tend to trade at.
AAR's management commentary on the results and earnings guidance
WOOD DALE, Ill., Sept. 25, 2019 /PRNewswire/ -- AAR CORP. (NYSE: AIR) today reported first quarter Fiscal Year 2020 consolidated sales of $541.5 million and income from continuing operations of $17.1 million, or $0.49 per diluted share. For the first quarter of the prior year, the Company reported sales of $466.3 million and income from continuing operations of $18.9 million, or $0.54 per diluted share. Our adjusted diluted earnings per share from continuing operations were $0.57 in the current quarter compared to $0.54 in the first quarter of the prior year.
"We are pleased with the strong start to Fiscal 2020 as our momentum carried into the first quarter. We saw continued strength in our parts supply activities, as well as in government programs. We are also pleased with the positive impact our efforts to attract and retain talent have had in our MRO activities," said John M. Holmes, President and Chief Executive Officer of AAR CORP.
Holmes concluded, "We are very pleased with the recent C-40 award and other new contract wins and we remain well-positioned to continue to secure new business across the commercial and government markets. Demand for our aviation services offering remains very strong and we are excited about the opportunities we see for Fiscal 2020."
Outlook
We are re-affirming our financial guidance for Fiscal Year 2020, which includes sales in the range of $2.1 to $2.2 billion and adjusted diluted earnings per share from continuing operations of $2.45 to $2.65. We continue to expect selling, general and administrative expenses to be approximately 10.5% of sales and anticipate an effective tax rate of 24% in Fiscal Year 2020.
"We are pleased with the strong start to Fiscal 2020 as our momentum carried into the first quarter. We saw continued strength in our parts supply activities, as well as in government programs. We are also pleased with the positive impact our efforts to attract and retain talent have had in our MRO activities," said John M. Holmes, President and Chief Executive Officer of AAR CORP.
Holmes concluded, "We are very pleased with the recent C-40 award and other new contract wins and we remain well-positioned to continue to secure new business across the commercial and government markets. Demand for our aviation services offering remains very strong and we are excited about the opportunities we see for Fiscal 2020."
Outlook
We are re-affirming our financial guidance for Fiscal Year 2020, which includes sales in the range of $2.1 to $2.2 billion and adjusted diluted earnings per share from continuing operations of $2.45 to $2.65. We continue to expect selling, general and administrative expenses to be approximately 10.5% of sales and anticipate an effective tax rate of 24% in Fiscal Year 2020.
AIR (NYSE: AIR) stock price history
The image below shows the stock price history of AAR (NYSE: AIR) over the last 5 years. And it's been a good time for AAR (AIR). 5 years ago AAR was trading around $25 a stock, and its currently it's trading at $45.32 Thats a decent return of 81.2% provided over the last 5 years. The stock is also trading at a lot closer to its 52 week high of $51.52 than it is to its 52 week low of $29.84 which to us is a clear indication that the short term sentiment and momentum of AAR's stock is very positive.
Recent coverage of AAR (NYSE:AIR)
The extract below shows recent coverage of AAR as obtained from Zacks
AAR (AIR - Free Report) came out with quarterly earnings of $0.57 per share, beating the Zacks Consensus Estimate of $0.52 per share. This compares to earnings of $0.54 per share a year ago. These figures are adjusted for non-recurring items. is quarterly report represents an earnings surprise of 9.62%. A quarter ago, it was expected that this airplane maintenance company would post earnings of $0.62 per share when it actually produced earnings of $0.64, delivering a surprise of 3.23%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. AAR, which belongs to the Zacks Aerospace - Defense Equipment industry, posted revenues of $541.50 million for the quarter ended August 2019, surpassing the Zacks Consensus Estimate by 8.65%. This compares to year-ago revenues of $466.30 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. AAR shares have added about 17.6% since the beginning of the year versus the S&P 500's gain of 18.3%.
Read the original article here
AAR (AIR - Free Report) came out with quarterly earnings of $0.57 per share, beating the Zacks Consensus Estimate of $0.52 per share. This compares to earnings of $0.54 per share a year ago. These figures are adjusted for non-recurring items. is quarterly report represents an earnings surprise of 9.62%. A quarter ago, it was expected that this airplane maintenance company would post earnings of $0.62 per share when it actually produced earnings of $0.64, delivering a surprise of 3.23%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. AAR, which belongs to the Zacks Aerospace - Defense Equipment industry, posted revenues of $541.50 million for the quarter ended August 2019, surpassing the Zacks Consensus Estimate by 8.65%. This compares to year-ago revenues of $466.30 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. AAR shares have added about 17.6% since the beginning of the year versus the S&P 500's gain of 18.3%.
Read the original article here
AAR's (NYSE: AIR) latest stock valuation
So based on the earnings report of AAR (NYSE:AIR) what do we value AAR (AIR) stock at? Based on their latest earnings report our target (full value) price for AAR at $42.10 a stock. We therefore believe the stock of AAR is overvalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $42.10 Therefore we believe the a good entry point into the stock is below $37.90. We believe the stock of AAR will pull back slightly from its current price levels in coming weeks and months as we believe it is overvalued.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $42.10 Therefore we believe the a good entry point into the stock is below $37.90. We believe the stock of AAR will pull back slightly from its current price levels in coming weeks and months as we believe it is overvalued.