AAR (AIR) came out with quarterly earnings of $0.75 per share, which beat the Zacks Consensus Estimate of $0.68 per share. This compared to earnings per share of $0.63 a year ago. These figures have been adjusted for non-recurring items.
This quarterly report represents an earnings surprise of 10.29%. A quarter ago, this aircraft maintenance company was expected to earn $0.69 per share, while it actually earned $0.69, no surprise.
Over the past four quarters, the company has exceeded consensus EPS estimates three times.
AAR, which belongs to the Zacks Aerospace – Defense Equipment industry, posted revenue of $521.1 million for the quarter ending February 2023, beating the Zacks Consensus Estimate by 8.15%. This compares to a year-ago revenue of $452.2 million. The company has topped consensus revenue estimates three times in the last four quarters.
The sustainability of the stock’s immediate price movement will depend mostly on management’s commentary on the earnings call based on recently released numbers and future earnings expectations.
Since the beginning of the year, AAR shares are up about 15.5%, compared to a 2.9% gain for the S&P 500.
What’s next for AAR?
While AAR has outperformed the market so far this year, the question on investors’ minds is what’s next for the stock?
There’s no easy answer to this important question, but one reliable measure that can help investors figure it out is a company’s earnings outlook. It includes not only consensus earnings expectations for the coming quarters, but also how those expectations have changed recently.
Empirical research shows a strong correlation between trends in near-term stock movements and earnings estimate revisions. Investors can track such revisions themselves or rely on a tried-and-tested ratings tool such as Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Prior to the release of this earnings, the outlook for AAR was revised to: Unfavorable. While the magnitude and direction of the estimate revision may change following the company’s recently released earnings report, the current position translates to a Zacks Rank #4 (Sell) for the stock. Hence, a weak performance is expected from the equity market in the near future. You can find a complete list of today’s Zacks #1 Ranked (Strong Buy) stocks here.
It will be interesting to see how the estimates for the coming quarters and the current financial year change in the coming days. The current consensus EPS estimate is $0.74 on $515.02 million in revenue for the coming quarter and $2.75 on $1.91 billion in revenue for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can also have an impact on a stock’s performance. In terms of Zacks Industry Rank, Aerospace – Defense Equipment is currently in the top 35% of the 250 plus Zacks Industries. Our research shows that the top 50% of Jack-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Elbit Systems (ESLT), another stock in the same industry, is yet to report its results for the quarter ended December 2022. The result is expected to be released on March 28.
This maker of defense electronics is expected to post quarterly earnings of $1.86 per share in its upcoming report, representing a year-over-year change of -13.1%. The consensus EPS estimate for the quarter remained unchanged over the last 30 days.
Elbit Systems’ revenue is expected to be $1.49 billion, down 0.3% from the year-ago quarter.
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Jax Investment Research
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