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AAR Corp (AIR) Margin Recovery In Q2 2026 Reinforces Bullish Profitability Narratives

Simply Wall St · 4d ago

AAR Corp. (AIR) has reported results for Q2 2026, with revenue of US$795.3 million and basic EPS of US$0.92, alongside trailing twelve month EPS of US$2.59 and net income of US$94.1 million. The company’s revenue has increased from US$686.1 million in Q2 2025 to US$795.3 million in Q2 2026, while quarterly EPS has moved from a loss of US$0.87 to a profit of US$0.92. This represents a very large year-over-year earnings improvement that feeds into forecasts calling for about 34.7% annual earnings growth. With trailing net profit margins now at 3.2% compared with 0.4% last year, the latest results highlight a business where profitability is becoming a more prominent part of the narrative.

See our full analysis for AAR.

With the numbers on the table, the next step is to see how this earnings profile compares with the widely held narratives around AAR, and where the recent results might prompt investors to reconsider their assumptions.

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NYSE:AIR Earnings & Revenue History as at Jan 2026
NYSE:AIR Earnings & Revenue History as at Jan 2026

94.1 million TTM profit with a 3.2% margin

  • Over the last twelve months, AAR earned US$94.1 million of net income on US$2.97b of revenue, which works out to a 3.2% net margin compared with 0.4% in the prior year period.
  • Consensus narrative talks about higher long term profitability as MRO expansion, distribution growth and digital platforms mature, and these numbers partly back that up while also showing the limits:
    • The move from 0.4% to 3.2% net margin lines up with the view that operational efficiencies and mix shift toward higher margin work are starting to show in the income statement.
    • At the same time, a 3.2% margin on US$2.97b of revenue is still low in absolute terms, so the current figures do not yet reflect the 9.2% margin level that is discussed for future years.

Large one off US$70.5 million loss still in the rear view mirror

  • The trailing twelve month figures include a one off loss of US$70.5 million, which means the US$94.1 million of net income and 3.2% net margin are reported after that item is factored in.
  • Bears worry that unexpected hits and execution risks could limit the benefits from MRO, distribution and digital investments, and this one off charge gives them a concrete data point to point to:
    • The presence of a US$70.5 million loss inside a period that otherwise shows a very large earnings improvement highlights that unusual items can still have a big impact on reported profit.
    • For readers weighing the cautious view, it is a reminder to look closely at how much of the US$94.1 million of trailing profit is tied to normal operations versus items that may not repeat.
On a day when trailing profit looks healthier, some investors will want to see how skeptics frame that US$70.5 million hit and what they think it means for future setbacks. 🐻 AAR Bear Case

P/E of 37.9x with shares below DCF fair value

  • Based on the supplied data, AAR trades at a P/E of 37.9x, which is below the industry average of 40.4x and well below the peer average of 57.9x. The current share price of US$91.34 compares with a stated DCF fair value of about US$216.90.
  • Bulls argue that earnings growth and business expansion justify a stronger valuation, and the current metrics lean in their favor on a few fronts:
    • Forecast earnings growth of about 34.7% a year, together with reported earnings growth over the past year that is many times higher than the prior period, provide the growth backdrop bulls often look for when the P/E sits below peer levels.
    • The gap between the current price of US$91.34 and the DCF fair value estimate of roughly US$216.90 is one of the main supports for the optimistic case that the market is not fully reflecting the earnings profile described in recent numbers.
If you are curious how those growth forecasts and valuation gaps fit into the bullish case, it is worth seeing how supporters join the dots across segments and contracts. 🐂 AAR Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for AAR on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your AAR research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

See What Else Is Out There

AAR’s 3.2% net margin on US$2.97b of revenue and the recent US$70.5 million one off loss indicate that profitability still appears fragile and exposed to setbacks.

If those swings make you prefer steadier progress, check out stable growth stocks screener (2144 results) to focus on companies that have a stronger record of consistent earnings and revenue through different conditions.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.