The 10-second takeaway
For the quarter ended May 31 (Q4), AAR beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped slightly. Non-GAAP earnings per share grew. GAAP earnings per share dropped significantly.
Margins dropped across the board.
AAR logged revenue of $553.8 million. The seven analysts polled by S&P Capital IQ expected a top line of $518.1 million on the same basis. GAAP reported sales were 1.7% lower than the prior-year quarter's $563.3 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
EPS came in at $0.50. The seven earnings estimates compiled by S&P Capital IQ forecast $0.45 per share. Non-GAAP EPS of $0.50 for Q4 were 11% higher than the prior-year quarter's $0.45 per share. GAAP EPS of $0.01 for Q4 were 97% lower than the prior-year quarter's $0.32 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
For the quarter, gross margin was 10.9%, 350 basis points worse than the prior-year quarter. Operating margin was 1.4%, 400 basis points worse than the prior-year quarter. Net margin was 0.1%, 220 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $524.3 million. On the bottom line, the average EPS estimate is $0.45.
Next year's average estimate for revenue is $2.15 billion. The average EPS estimate is $2.04.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 293 members out of 313 rating the stock outperform, and 20 members rating it underperform. Among 96 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 94 give AAR a green thumbs-up, and two 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 $21.67.
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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. The Motley Fool has no position in any of the stocks mentioned. 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.