AAR Corp. Stock Upgraded (AIR)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- AAR (NYSE: AIR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • Compared to its closing price of one year ago, AIR's share price has jumped by 36.17%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AIR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 104.73% to $27.50 million when compared to the same quarter last year. In addition, AAR CORP has also vastly surpassed the industry average cash flow growth rate of -13.24%.
  • The debt-to-equity ratio is somewhat low, currently at 0.78, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
  • AAR CORP's earnings per share declined by 8.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, AAR CORP reported lower earnings of $1.66 versus $1.74 in the prior year. This year, the market expects an improvement in earnings ($1.81 versus $1.66).
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AAR CORP. provides products and services to aviation, government, and defense markets worldwide. The company has a P/E ratio of 11.5, below the S&P 500 P/E ratio of 17.7. AAR has a market cap of $760.9 million and is part of the industrial goods sector and aerospace/defense industry. Shares are up 3.6% year to date as of the close of trading on Thursday.

You can view the full AAR Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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