The 10-second takeaway
For the quarter ended Feb. 29 (Q3), AAR beat expectations on revenues and beat slightly on earnings per share.
Compared to the prior-year quarter, revenue improved significantly, and GAAP earnings per share grew.
Margins contracted across the board.
AAR reported revenue of $534.2 million. The nine analysts polled by S&P Capital IQ hoped for net sales of $517.6 million on the same basis. GAAP reported sales were 18% higher than the prior-year quarter's $451 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.50. The nine earnings estimates compiled by S&P Capital IQ predicted $0.49 per share. GAAP EPS of $0.50 for Q3 were 14% higher than the prior-year quarter's $0.44 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 16.3%, 90 basis points worse than the prior-year quarter. Operating margin was 6.7%, 150 basis points worse than the prior-year quarter. Net margin was 3.9%, 10 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $548.9 million. On the bottom line, the average EPS estimate is $0.57.
Next year's average estimate for revenue is $2.01 billion. The average EPS estimate is $1.90.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 287 members rating the stock outperform and 18 members rating it underperform. Among 97 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 93 give AAR a green thumbs-up, and four give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on AAR is outperform, with an average price target of $26.67.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.