Aviation and defense services provider AAR CORP (NYSE: AIR) beat Wall Street’s revenue expectations in Q1 CY2026, with sales up 24.6% year on year to $845.1 million. On top of that, next quarter’s revenue guidance ($905.4 million at the midpoint) was surprisingly good and 4.6% above what analysts were expecting. Its non-GAAP profit of $1.25 per share was 8.1% above analysts’ consensus estimates.

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"AAR delivered another outstanding quarter, continuing our momentum. Total sales were up 25%, including 14% organic adjusted sales growth," stated John M. Holmes, AAR's Chairman, President and CEO.

Company Overview

The first third-party MRO approved by the FAA for Safety Management System Requirements, AAR (NYSE: AIR) is a provider of aircraft maintenance services

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, AAR’s 14% annualized revenue growth over the last five years was exceptional. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. AAR’s annualized revenue growth of 18.9% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

We can better understand the company’s revenue dynamics by analyzing its three most important segments: Parts Supply, Repair & Engineering, and Integrated Solutions, which are 46.4%, 31.4%, and 19.9% of revenue. Over the last two years, AAR’s revenues in all three segments increased. Its Parts Supply revenue (engine and airframe parts) averaged year-on-year growth of 26.1% while its Repair & Engineering (maintenance, repair, and overhaul services) and Integrated Solutions (fleet management) revenues averaged 16.9% and 8.2%.

This quarter, AAR reported robust year-on-year revenue growth of 24.6%, and its $845.1 million of revenue topped Wall Street estimates by 4.1%. Company management is currently guiding for a 20% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 11.3% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is noteworthy and implies the market sees success for its products and services.

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Operating Margin

AAR was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.6% was weak for an industrials business.

On the plus side, AAR’s operating margin rose by 3.2 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q1, AAR generated an operating margin profit margin of 7.8%, down 2.7 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

AAR’s EPS grew at 33.3% compounded annual growth rate over the last five years, higher than its 14% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of AAR’s earnings can give us a better understanding of its performance. As we mentioned earlier, AAR’s operating margin declined this quarter but expanded by 3.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For AAR, its two-year annual EPS growth of 19.5% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q1, AAR reported adjusted EPS of $1.25, up from $0.99 in the same quarter last year. This print beat analysts’ estimates by 8.1%. Over the next 12 months, Wall Street expects AAR’s full-year EPS of $4.67 to grow 12%.

Key Takeaways from AAR’s Q1 Results

We were impressed by how significantly AAR blew past analysts’ revenue expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $108.86 immediately after reporting.

AAR had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).