One-Hour Analysis of AAR Corp.

From Value Line

  • Stock had a big run 2002-6, miserable ever since
  • Under book and about 10x earnings
  • Added too much debt in 2012, almost enough to be totally disqualifying
  • Interest coverage of about 3x, not encouraging
  • Over 50% commercial aerospace, a positive
  • Some insider buying
  • Big capx in last few years, needs to be investigated

From Footnotes

  • Large exposure to troop transport and logistics
  • Own aircraft fleet and leases others, some in joint ventures, very complex
  • Very complex financing transactions
  • The recent acquisitions were primarily international

From Google Finance

  • Chairman and CEO have been around a long time, CEO has financial background
  • Four Wall Street buy recommendation, not surprising with the amount of investment banking work they have generated
  • Diamond Hill owns a good chunk, no other value guys own much
  • Soros sold in 2011

From Seeking Alpha

  • No significant stories the last few years

Conclusion

This is an interesting company that has built a nice business, and the stock is very cheap.  However, the balance sheet and recent acquisitions means that we will be in “observe only” mode with this stock.

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