Forensic Analysis · Aerospace & Defense · as of Nov 9, 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.
C · Mixed — selective
Forensic grade
Safe
Financial health
4.9
Distress distance
6
Forensic signals
12.9%
ROE
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 (auditor quality, say on pay, board independence, going concern). 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 C (Mixed — selective) forensic quality grade, and its balance-sheet distress test reads 4.9, placing it in the Safe zone. 6 forensic signals were flagged in its latest SEC filings, led by cash conversion.
What the filings flag
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.Cash conversion: operating cash flow divided by net income, the share of profit that arrived as cash.
+14.6%
FY2025→FY2026
Accruals ratio (% of NOA).Net operating assets grew +14.6% 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. Net operating assets also rose $94.6M through acquisitions (increase in goodwill and intangibles); that purchase is investing and is excluded from this ratio. 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 14.6%. 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.Accruals ratio: the year-over-year change in net operating assets, relative to their own average.NOA (net operating assets): the money tied up in running the business, operating assets minus operating liabilities.
10.0%
FY2026
Return on invested capital.Return on invested capital is 10.0% 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 went from $2.2B in FY2024 to $2.4B in FY2026 (+9%), while the revenue it carried went from $2.3B to $3.3B. Across FY2025–FY2026, $332M went into capital expenditure and acquisitions against $87M of depreciation excluding $40M of intangible-asset amortisation. The base is struck net of amortisation, write-downs and the current liabilities that fund it, so it moved by less than that spending net of the wear, and this row does not say which of those absorbed the difference.
+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 — 35.4M shares in FY2024, 38.4M in FY2026: 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 across FY2024–FY2026 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.
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.
Key fundamentals
Latest Revenue$3.31B
Revenue Growth YoY+19.0%
Revenue CAGR (2yr)+19.4%
Net Margin5.7%
Free Cash Flow$62.1M
Return on Equity12.9%
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?