Have you been paying attention to shares of AAR (AIR)? Shares have been on the move with the stock up 1.3% over the past month. The stock hit a new 52-week high of $122.97 in the previous session. AAR has gained 43.2% since the start of the year compared to the 3.4% move for the Zacks Aerospace sector and the 5.6% return for the Zacks Aerospace - Defense Equipment industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on March 24, 2026, AAR reported EPS of $1.25 versus consensus estimate of $1.21.
Valuation Metrics
Though AAR has recently hit a 52-week high, what is next for AAR? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
AAR has a Value Score of C. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 24X current fiscal year EPS estimates, which is not in-line with the peer industry average of 36.1X. On a trailing cash flow basis, the stock currently trades at 21.7X versus its peer group's average of 26.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, AAR currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if AAR fits the bill. Thus, it seems as though AAR shares could have potential in the weeks and months to come.
How Does AIR Stack Up to the Competition?
Shares of AIR have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Elbit Systems Ltd. (ESLT). ESLT has a Zacks Rank of #2 (Buy) and a Value Score of F, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. Elbit Systems Ltd. beat our consensus estimate by 10.22%, and for the current fiscal year, ESLT is expected to post earnings of $14.65 per share on revenue of $8.93 billion.
Shares of Elbit Systems Ltd. have gained 20.7% over the past month, and currently trade at a forward P/E of 62.25X and a P/CF of 52.66X.
The Aerospace - Defense Equipment industry is in the top 34% of all the industries we have in our universe, so it looks like there are some nice tailwinds for AIR and ESLT, even beyond their own solid fundamental situation.
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This article originally published on Zacks Investment Research (zacks.com).