July 2, 2012

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The AIR is Fine

AAR Corp (AIR, $AIR) Jumps 30% AAR Corp. is a worldwide leader in supplying aftermarket products and services to the global aerospace/aviation industry. It provides aircraft, engines and engine parts; airframe and accessories products; overhaul, repair and maintenance services and company-manufactured products to customers in all segments of this industry, including the world's largest commercial airlines and air cargo operators, original equipment manufacturers, domestic and foreign military and government agencies, aircraft leasing companies and maintenance service providers. AAR Corp was the alternate long pick from the Aerospace Sector for this month's edition of the ValuEngine Forecast 16 Newsletter. When selected for our newsletter on July 18th, the stock was trading at $10.34/share. The stock closed Friday at $13.48/share. That's a gain of 30% in ten days. AAR CEO David Storch recently bought 20000 shares and thus his "insider" trade was marked by analysts as a positive sign for the stock. In addition, the company also announced a share buy back program whereby the company would spend up to $50 million to repurchase stock. ValuEngine has issued a BUY recommendation for AAR CORP on Jul. 02, 2012. Based on the information we have gathered and our resulting research, we feel that AAR CORP has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE P/E ratio, market valuation and price/sales ratio.

Based on available data as of Jul. 02, 2012, we believe that AIR should be trading at $25.93. This makes AIR 48.01% undervalued. Fair Value indicates what we believe the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. For AIR, we base this on actual earnings per share (EPS) for the previous four quarters of $1.76, forecasted EPS for the next four quarters of $2.18, and correlations to the 30- year Treasury bond yield of 2.76%.

ValuEngine Forecast
Target Price Expected Return 0.01% 1.80% 1.52% 6.78% 13.36% 11.51%

1-Month 3-Month 6-Month 1-Year 2-Year 3-Year

13.48 13.72 13.69 14.39 15.28 15.03

Valuation & Rankings

Valuation 1-M Forecast Return 12-M Return Sharpe Ratio 5-Y Avg Annual Return Volatility Expected EPS Growth Market Cap (billions) Trailing P/E Ratio Forward P/E Ratio PEG Ratio Price/Sales Market/Book Beta Alpha 48.01% undervalued 0.01% -49.13% -0.36 -17.91% 50.13% 23.96% 0.54 7.67 6.19 0.32 0.28 1.23 1.29 -0.55 Valuation Rank 1-M Forecast Return Rank Momentum Rank Sharpe Ratio Rank 5-Y Avg Annual Rtn Rank Volatility Rank EPS Growth Rank Size Rank Trailing P/E Rank Forward P/E Ratio Rank PEG Ratio Rank Price/Sales Rank Market/Book Rank Beta Rank Alpha Rank 90 47 17 32 35 49 59 65 91 92 81 84 60 41 17

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Market Overview
Summary of VE Stock Universe
Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 67.47% 32.53% 33.12% 12.32%

Sector
Aerospace Auto-Tires-Trucks Basic Materials Business Services Computer and Technology Construction Consumer Discretionary Consumer Staples Finance Industrial Products Medical Multi-Sector Conglomerates Oils-Energy Retail-Wholesale Transportation Utilities

Change
-0.74% -0.67% -0.89% -0.70% -0.79% 0.25% -0.25% 0.01% -0.06% -0.40% 0.37% -0.57% -0.12% -0.05% -0.09% -0.09%

MTD
-0.98% -2.17% 0.26% 0.45% 0.23% 3.09% -1.04% 1.11% 1.86% -1.70% 5.69% -0.32% -1.96% -0.83% -0.32% 3.83%

YTD
-2.69% -1.44% -6.59% 3.60% 4.36% 16.37% 6.40% 7.45% 12.12% -2.51% 12.24% 3.35% -13.04% 6.10% 4.14% -1.74%

Valuation
0.81% overvalued 16.89% undervalued 15.60% undervalued 1.93% undervalued 4.87% overvalued 6.02% undervalued 2.42% undervalued 10.96% overvalued 7.21% overvalued 2.41% overvalued 7.75% overvalued 0.42% overvalued 14.11% undervalued 3.65% overvalued 3.69% undervalued 9.96% overvalued

Last 12-M Return

-12.97% -19.94% -33.36% -3.41% -11.67% -6.06% -5.97% -4.78% 0.18% -14.78% -11.14% -9.00% -26.56% 2.55% -16.35% -6.29%

P/E Ratio
37.45 18.49 22.18 33.84 38.19 43.96 30.56 18.96 22.45 19.54 30.02 14.28 25.52 25.55 24.45 19.09