AAR entered fiscal 2026 as the aviation aftermarket's quiet compounder - a parts distributor and MRO operator best-known for breadth rather than speed. It exited the year as the stock the market suddenly could not get enough of, roughly doubling over twelve months. The cause was a fiscal year that management has repeatedly called record-breaking, and the numbers support the adjective. Fiscal 2026 revenue rose 19% to $3.31 billion. Adjusted earnings of $5.05 per diluted share climbed 29% from a clean $3.91 base. Adjusted EBITDA reached $401 million, up 24%, and net leverage fell from 2.72 times to 2.03 times - inside the company's stated 2.0-to-2.5 target. The fourth quarter kept the pace: sales up 23% to $928 million, adjusted EPS up 32% to $1.53.
The story underneath the prints is a portfolio move, not just a good year. AAR re-segmented its operations, folded its government and mobility work into a new Government Solutions unit, and announced the wind-down of its asset-heavy Legacy Commercial Programs business - a shrinking, flight-hour-based pool-and-repair line that had stopped meeting the company's return thresholds. In its place AAR is pushing a higher-margin mix built on new parts Distribution, airframe MRO at scale, and a small but fast-growing software stack. Something is clearly working: sales grew 14% organically in fiscal 2026 after acquisitions are set aside, and operating leverage is showing up - GAAP operating margin expanded from 6.7% to 8.4%.
The central question is no longer whether the pivot works. It is what the market is now paying for it. At $145.45 the shares trade near the $154 high-water mark, at roughly 30 times trailing GAAP earnings, about 29 times fiscal-2026 adjusted earnings, and roughly 25 times forward earnings per a consensus that stretches growth into fiscal 2027. Management guided first-quarter fiscal 2027 sales growth, excluding the exit segment, of 21% to 23% and an adjusted EBITDA margin of 12.25% to 12.75% - a step up from the 12.1% just delivered. The report's whole case rests on one hinge: whether double-digit organic growth and steady margin expansion can keep a double-digit multiple that is now pricing in exactly that, without leaning too hard on acquisitions and an easy prior-year base.