Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AAR (NYSE:AIR), a product and service supplier to the aviation, government, and defense industries, flew higher by as much as 11% after reporting better-than-expected third-quarter earnings results.

So what: For the quarter, AAR reported EPS of $0.46 despite a nearly 3% drop in year-over-year revenue to $520.2 million. Wall Street had been anticipating only a $0.43 profit per share from AAR on just $516.5 million in revenue. Aviation services provided the biggest pop, with revenue increasing 9% while sales in its technology products segment sank a dismal 30%. Looking ahead, AAR’s guidance calls for $1.78-$1.82 in EPS on approximately $2.15 billion revenue. This is markedly better than the $1.70 and $2.12 billion the Street had been forecasting.

Now what: Once again, the demise of companies that rely on contracts from the government has been overstated, and AAR is a prime example. However, I can't overlook the simple fact that budget cuts will make growth in this area of AAR's business difficult. With that, I could see some very modest upside left in AAR shares, but I wouldn't be too aggressive in chasing them higher.

Craving more input? Start by adding AAR to your free and personalized Watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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