Forensic Analysis · Industrials / Manufacturing / Defense · as of Sep 25, 2026
Aar Corp (AIR)
A forensic read on Aar Corp built from its complete SEC filings — financial-health screens, earnings quality, red flags and a price-aware rating. Reproducible math, not opinion.
D · Weak — demands caution
Forensic grade
Safe
Financial health
6.9
Distress distance
Clean
Earnings quality
6
Forensic signals
24.2
P / E (ttm)
11.0%
ROE
$4.8B
Market cap
19.0%
Revenue growth
This free snapshot doesn't read filing or proxy text, so the auditor-quality and governance checks that can lower a grade were not evaluated (red flags, auditor quality, say on pay, board independence, going concern, valuation). Those checks only ever lower a grade, so the full analysis can land below the grade above but never above it — treat it as the most favourable reading, not the settled one.
Aar Corp earns a D (Weak — demands caution) forensic quality grade, and its balance-sheet distress test reads 6.9, placing it in the Safe zone. 6 forensic signals were flagged in its latest SEC filings, led by share-count dilution.
What the filings flag
+4.2%/yr
FY2024–FY2026
Share-count dilution.Diluted share count changed +8% over the last 2 years to FY2026 (+4.2%/yr). The count is growing: more stock was issued than repurchased over this window, so aggregate results grew faster than their per-share equivalents. That's ~4.2% shaved off per-share growth every year — total profit has to grow that much just to keep earnings-per-share flat, and a stake held since FY2024 has been diluted ~8%.
0.5% of rev
FY2026
Stock-based comp load.Stock-based compensation ran 0.5% of revenue and 29% of free cash flow in FY2026 — about $0.46 per diluted share. No cash left the business to pay it, which is why operating cash flow adds it back. Net of repurchases the diluted count still rose about 4.2% a year and that rate is not falling, so total profit has to grow by that much annually before any of it reaches a share. Stock compensation is one source of that issuance; acquisition consideration, equity raises, convertibles and other employee plans also net into the count, and these figures do not separate them.
0.72×
FY2024–FY2026
Cash conversion.Over FY2024–FY2026, cumulative operating cash flow was 0.72× cumulative net income. Cash is lagging reported profit. The shortfall is profit tied up in working capital rather than collected — the accrual and receivables lines below show where.
+18.7%
FY2025→FY2026
Accruals ratio (% of NOA).Net operating assets grew +18.7% relative to their own average in FY2026 — scaled by NOA itself, not by total assets, which is what the Forensic Screens card's own accrual row divides by. Accruals are building faster than is comfortable — part of profit is sitting in the balance sheet rather than turning to cash. The build is led by inventory up +21% against +19% in cost of sales and receivables up +9% against revenue +19%. A cash-flow measure on the same base disagrees: reported earnings ran in line with operating cash by 4% of net operating assets, against an accruals ratio of 18.7%. The two are computed differently: the accruals ratio is the change in net operating assets over average net operating assets, while the cash-flow figure is net income less operating cash flow over that same average. Read them as two results, not one.
Key fundamentals
Latest Revenue$3.31B
Revenue Growth YoY+19.0%
Revenue CAGR (2yr)+19.5%
Net Margin5.7%
Free Cash Flow$62.1M
Return on Equity11.0%
Debt / Equity0.52x
The forensic grade and screens above are free — no account needed. Want the AI investment read on top — the 0–100 rating, thesis, bull-vs-bear, red flags and the 12-month scenario, written from Aar Corp's actual 10-K/10-Q/8-K filings?
Return on invested capital.Return on invested capital is 9.1% in the latest fiscal year and rising across FY2024–FY2026 from 3.6%. After-tax operating profit was $81M in FY2024 and $243M in FY2026. The capital base behind it grew +20% across FY2024–FY2026, from $2.2B to $2.7B, and the return did not fall doing it, so the dollars added over that window earned at least the 3.6% the older base was already earning.
721% of FCF
FY2025
Shareholder returns.Returned $10M to shareholders (buybacks + dividends) in FY2025 — 721% of free cash flow, but 28% of operating cash flow. Returns run ahead of free cash flow because the business is also funding heavy growth capex (usually debt-financed); the payout itself is covered by operating cash — sustainable as long as that spending is genuine expansion, not upkeep.