Best Ideas 2017: Gabelli Analyst Shannon Burke discusses AAR Corp

Best Ideas 2017: Gabelli Analyst Shannon Burke discusses AAR Corp
Photo of Mario Gabelli via Insider Monkey (CC BY-ND 2.0)

Play Quizzes 4

Hi my name is Shannon Burke, I’m a research analyst here at Gabelli.

Today i want to recommend AAR Corp as one of our best ideas for 2017.

How Value Investors Can Win With Tech And “Fallen” Growth Stocks

Valuation Present ValueMany value investors have given up on their strategy over the last 15 years amid concerns that value investing no longer worked. However, some made small adjustments to their strategy but remained value investors to the core. Now all of the value investors who held fast to their investment philosophy are being rewarded as value Read More

AAR is a diversified services business serving the commercial aviation, government and defense markets.

The company has 34.6 million shares outstanding, closed at 33.25 dollars per share for an equity market cap of 1.1 billion dollars, $140 million of net debt for $1.3 billion TEV.

AAR’s Expeditionary Services segment, which provides support services to military and government operations, has been operating at cash flow neutral due to the withdrawal of US troops from the Middle East.

However, it recently won a contract to operate the Department of State’s Air Wing in six countries. We expect this contract to double the size of the Expeditionary Services segment by FY2018, be immediately accretive to earnings and significantly improve cash flow.

AAR’s Aviation Services segment is uniquely levered to the Aerospace cycle, as the company’s supply chain and MRO businesses will benefit from increased flight hours and expanding fleets without being subjected to production delays caused by Boeing and Airbus rate changes.

The company also recently signed a component repair agreement with Air New Zealand, which opens component repair in the Asia Pacific market, the fastest growing geography in Aerospace.

AAR is a significant cash generator, and we estimate EPS can grow from $1.45 in FY 2017 to $2.00 in 2018 and $2.20 in 2019, and calculate a 2018 Private Market Value estimate of $52 per share.

Updated on

No posts to display


  1. This is how you can also make quite wonderful money monthly… You can do it for you personally! After been without work for six months time, I started doing freelancing over this site and at this time i couldn’t be happier. After half a year on my latest project my per month earnings are around 12k per 30 days…>>TIMELY84.COM

Comments are closed.