Head to Head Comparison: AAR (AIR) and Triumph Group (TGI)

AAR (NYSE: AIR) and Triumph Group (NYSE:TGI) are both small-cap aerospace companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Insider and Institutional Ownership

89.4% of AAR shares are owned by institutional investors. 9.3% of AAR shares are owned by company insiders. Comparatively, 2.8% of Triumph Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.



Valuation and Earnings

This table compares AAR and Triumph Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AAR $1.77 billion 0.87 $56.50 million $1.45 30.71
Triumph Group $3.53 billion 0.35 -$42.95 million $6.54 3.83

AAR has higher earnings, but lower revenue than Triumph Group. Triumph Group is trading at a lower price-to-earnings ratio than AAR, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

AAR has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, Triumph Group has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500.

Profitability

This table compares AAR and Triumph Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AAR 1.34% 6.02% 3.62%
Triumph Group -7.68% 27.59% 5.31%

Dividends

AAR pays an annual dividend of $0.30 per share and has a dividend yield of 0.7%. Triumph Group pays an annual dividend of $0.16 per share and has a dividend yield of 0.6%. AAR pays out 20.7% of its earnings in the form of a dividend. Triumph Group pays out 2.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for AAR and Triumph Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AAR 0 0 5 0 3.00
Triumph Group 2 6 3 0 2.09

AAR currently has a consensus price target of $49.25, indicating a potential upside of 10.60%. Triumph Group has a consensus price target of $32.40, indicating a potential upside of 29.34%. Given Triumph Group’s higher possible upside, analysts plainly believe Triumph Group is more favorable than AAR.

Summary

AAR beats Triumph Group on 9 of the 16 factors compared between the two stocks.

AAR Company Profile

AAR CORP. provides products and services to commercial aviation, government, and defense markets worldwide. The company's Aviation Services segment offers aftermarket support and services; inventory management and distribution services; and maintenance, repair, and overhaul, as well as engineering services. This segment also sells and leases new, overhauled, and repaired engine and airframe parts and components; and provides inventory and repair programs, warranty claim management, and outsourcing programs for engine and airframe parts and components, as well as performance-based logistics programs in support of the U.S. Department of Defense (DoD) and foreign governments. In addition, it offers airframe inspection, maintenance, repair and overhaul, painting, line maintenance, airframe modification, structural repair, avionic and installation, exterior and interior refurbishment, and engineering and support services; repairs and overhauls landing gears, wheels, and brakes; and sells and leases used commercial aircraft. The company's Expeditionary Services segment provides products and services supporting the movement of equipment and personnel by the U.S. DoD, foreign governments, and non-governmental organizations. Its expeditionary airlift services offer fixed- and rotary-wing flight operations, such as search and rescue operations, and transporting personnel and cargo. This segment also designs, manufactures, and repairs transportation pallets, and various containers and shelters, as well as composite materials for commercial, business, and military aircraft; and provides engineering, design, and system integration services for command and control systems. The company primarily markets and sells products and services through its employees and foreign sales representatives. As of May 31, 2017, its portfolio consisted of two aircraft owned through joint ventures. AAR CORP. was founded in 1951 and is headquartered in Wood Dale, Illinois.

Triumph Group Company Profile

Triumph Group, Inc. designs, engineers, manufactures, repairs, overhauls, and distributes aero structures, aircraft components, accessories, subassemblies, and systems worldwide. The company operates through four segments: Integrated Systems, Aerospace Structures, Precision Components, and Product Support. It offers aircraft and engine mounted accessory drives, thermal control systems and components, cargo hooks, high lift actuations, cockpit control levers, hydraulic systems and components, landing gear actuation systems, control system valve bodies, landing gear components and assemblies, electronic engine controls, main engine gear box assemblies, exhaust nozzles and ducting, fuel pumps, geared transmissions and drive train components, secondary flight control systems, fuel metering units, and vibration absorbers, as well as offers processing services. The company also offers aircraft wings, flight control surfaces, composite and metal bonding, helicopter cabins, engine nacelles, precision machined parts, stretch-formed leading edges and fuselage skins, empennages, wing spars and stringers, acoustic and thermal insulation systems, and composite ducts and floor panels. In addition, it offers product support services, including component maintenance, repair, and overhaul, as well as postproduction supply chain services for air cycle machines, blades and vanes, APUs, cabin panes, shades, light lenses and other components, speed drives, combustors, engine and airframe accessories, stators, transition ducts, integrated drive generators, sidewalls, light assemblies, remote sensors, overhead bins, thrust reversers, and fuel bladder cells. The company serves the aviation industry, including original equipment manufacturers of commercial, regional, business, and military aircraft and aircraft components, as well as commercial and regional airlines and air cargo carriers. Triumph Group, Inc. was founded in 1993 and is headquartered in Berwyn, Pennsylvania.

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