What happened
Through the first three weeks of March, shares of AAR (AIR 0.21%) didn't move much. Over the period, they climbed about 1%. This week, however, the aviation services stock is gaining considerably more altitude. As of the end of trading on Thursday, it had risen 12.1% for the week.
The company's fiscal third-quarter 2022 earnings report, delivered after the closing bell on Tuesday, helped provide the impetus for that lift. But AAR also received some favorable coverage from Wall Street.
So what
For the fiscal period that ended Feb. 28, AAR beat analysts' consensus expectations on both the top and bottom lines. While Wall Street expected the company to report revenue of $432.5 million and earnings per share (EPS) of $0.58, AAR actually tallied sales of $452.2 million and EPS of $0.63.
Beyond the headline figures, investors were likely happy to see how the company has fared in the face of challenging headwinds.
"Early in the pandemic, we took a series of actions to better position the [c]ompany for margin improvement as the industry recovered," said AAR President and CEO John Holmes in the earnings press release. "We have now delivered our sixth straight quarter of adjusted operating margin expansion and our margins are exceeding pre-pandemic levels."
Image source: Getty Images.
Two favorable takes on AAR's stock from Wall Street also moved some investors to pick up shares this week. According to TheFly.com, Michael Ciarmoli, an analyst at Truist, raised his price target on AAR to $58 from $53 while maintaining a buy rating, and Ken Herbert, an analyst at RBC Capital, lifted his price target to $56 from $50.
Now what
It's too soon to say that AAR has flown out of the turbulence that it has encountered over the past two years, but after seeing the company's latest earnings report, it's safe to say that management is successfully navigating the company through its challenges. Valued at 31.6 times operating cash flow, shares of AAR seem inexpensive today, given that the stock's five-year average cash flow multiple is 58.6. As such, it's worth considering for investors looking for more exposure to the aerospace sector.
