AIR

AAR Corp is an aviation aftermarket services company — MRO, parts supply/distribution and integrated solutions — riding a strong commercial aerospace upcycle. The top line is robust: FY2025 revenue grew 19.9% to $2.78B and gross profit rose 19.3% to $528M, holding a steady 19.0% gross margin. That reflects healthy aftermarket demand plus contribution from acquisitions (notably the expanded parts-support business). Revenue has compounded impressively from $1.65B in FY2021 to $2.78B in FY2025.

The problem is everything below the gross line. Net income collapsed 73.0% to just $12.5M and diluted EPS fell to $0.35, driving a meaningless 385x headline P/E and a 1.0% ROE. Because gross profit actually grew, the earnings drop comes from below-the-line costs — higher interest on the $968M of long-term debt taken on for acquisitions, sharply higher depreciation/amortization (+37.3%), and elevated SG&A/integration and likely one-time items. Cash generation is thin and deteriorating: operating cash flow fell 17.2% to $36.1M against $34.7M of capex, leaving little free cash. Cash on hand is just $96.5M.