Wondering if AAR is still a smart buy after its big run, or if the easy money has already been made? Here is a closer look at what the market is really pricing into this stock.
Even after slipping slightly in the last week and month, AAR is still up 34.3% year to date and 22.3% over the past year, with a 143.1% gain over five years that suggests investors have been steadily re-rating the story.
Those moves have been supported by ongoing optimism around aviation services demand and AAR’s role as a key maintenance and logistics partner for airlines and defense customers. Investors are increasingly treating the company as a long term, infrastructure style play on global flight activity and fleet modernization.
On our numbers, AAR scores just 2/6 on basic undervaluation checks, which suggests the market is already factoring in a fair amount of optimism, but that is only part of the story. Next, we will look at different valuation approaches and then finish with a more robust way to assess whether the current price really makes sense.
AAR scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow model estimates what a company is worth today by projecting its future cash flows and discounting them back to the present. For AAR, the model uses a 2 stage Free Cash Flow to Equity approach based on analyst forecasts and longer term extrapolations by Simply Wall St.
AAR currently generates around negative $27.3 Million in free cash flow, but analysts expect this to turn positive and grow rapidly. Projections call for free cash flow to reach about $38 Million in 2026, then climb to roughly $203 Million by 2028 and around $589 Million by 2035, all in $. These rising cash flows, when discounted back, give an estimated intrinsic value of about $191.82 per share.
Compared with the current share price, this implies a 56.9% discount, suggesting the market is valuing AAR well below what its projected cash generation might justify. On DCF terms, AAR appears meaningfully undervalued in this model.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests AAR is undervalued by 56.9%. Track this in your watchlist or portfolio, or discover 906 more undervalued stocks based on cash flows.
AIR Discounted Cash Flow as at Dec 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for AAR.
For profitable companies like AAR, the Price to Earnings, or PE, ratio is a practical way to gauge how much investors are willing to pay today for each dollar of current earnings. In general, higher expected growth and lower perceived risk justify a higher, or more expensive, PE multiple, while slower or riskier businesses usually trade on lower ratios.
AAR currently trades on a PE of about 113.2x, which is well above both the Aerospace and Defense industry average of roughly 37.9x and the peer group average of around 54.1x. To put this in better context, Simply Wall St calculates a proprietary Fair Ratio of about 53.3x for AAR. This Fair Ratio estimates the PE the stock should trade on given its specific earnings growth outlook, profitability, risk profile, industry positioning, and market cap, rather than relying on blunt peer or sector comparisons.
Because AAR’s actual PE of 113.2x is significantly higher than its 53.3x Fair Ratio, the stock looks expensive on an earnings multiple basis, even after allowing for its growth and quality characteristics.
Result: OVERVALUED
NYSE:AIR PE Ratio as at Dec 2025
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Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simple stories investors create on Simply Wall St’s Community page that tie their view of AAR’s business drivers to explicit forecasts for revenue, earnings, and margins, and then to a Fair Value they can compare with today’s price to decide whether to buy or sell. Those Narratives automatically update as new news or earnings arrive. For example, a more optimistic AAR Narrative might assume that expanded MRO capacity, digital platforms like Trax, and defense contracts drive faster growth and higher margins to support a Fair Value above the current analyst consensus of $92.25. A more cautious Narrative might focus on OEM competition, aviation cyclicality, and execution risks to justify a Fair Value closer to or even below the current share price. This illustrates how different yet structured perspectives can coexist and provide a dynamic, easy to use framework for acting on your own view of the stock.
Do you think there’s more to the story for AAR? Head over to our Community to see what others are saying!
NYSE:AIR Community Fair Values as at Dec 2025
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.
Companies discussed in this article include AIR.
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