Wesco Aircraft Holdings (NYSE: WAIR) and AAR Corp. (NYSE:AIR) are both small-cap aerospace companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitabiliy and risk.
Risk & Volatility
Wesco Aircraft Holdings has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, AAR Corp. has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500.
This table compares Wesco Aircraft Holdings and AAR Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Wesco Aircraft Holdings||5.39%||11.03%||4.95%|
Earnings and Valuation
This table compares Wesco Aircraft Holdings and AAR Corp.’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Wesco Aircraft Holdings||$1.44 billion||0.70||$166.33 million||$0.79||12.72|
|AAR Corp.||$1.71 billion||0.68||$130.80 million||$1.38||24.87|
Wesco Aircraft Holdings has higher revenue, but lower earnings than AAR Corp.. Wesco Aircraft Holdings is trading at a lower price-to-earnings ratio than AAR Corp., indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
88.1% of Wesco Aircraft Holdings shares are held by institutional investors. Comparatively, 90.2% of AAR Corp. shares are held by institutional investors. 10.3% of Wesco Aircraft Holdings shares are held by company insiders. Comparatively, 8.2% of AAR Corp. shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
AAR Corp. pays an annual dividend of $0.30 per share and has a dividend yield of 0.9%. Wesco Aircraft Holdings does not pay a dividend. AAR Corp. pays out 21.7% of its earnings in the form of a dividend.
This is a breakdown of current recommendations and price targets for Wesco Aircraft Holdings and AAR Corp., as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Wesco Aircraft Holdings||1||3||2||0||2.17|
Wesco Aircraft Holdings currently has a consensus target price of $14.00, indicating a potential upside of 39.30%. AAR Corp. has a consensus target price of $48.75, indicating a potential upside of 42.05%. Given AAR Corp.’s stronger consensus rating and higher probable upside, analysts clearly believe AAR Corp. is more favorable than Wesco Aircraft Holdings.
AAR Corp. beats Wesco Aircraft Holdings on 9 of the 16 factors compared between the two stocks.
About Wesco Aircraft Holdings
Wesco Aircraft Holdings, Inc. is a distributor and provider of supply chain management services to the global aerospace industry. The Company operates through two segments: North America and Rest of World. As of September 30, 2016, the Company supplied over 565,000 active stock-keeping units (SKUs), including C-class hardware, chemicals, electronic components, bearings, tools and machined parts. The Company’s products include Hardware, Chemicals, Electronic Components, Bearings and Other Products. Its Services include Quality Assurance, Kitting and JIT Supply Chain Management. It caters to commercial, military and general aviation sectors, including the original equipment manufacturers (OEMs) and their subcontractors, through which it supports various Western aircraft programs, and also sells products to airline-affiliated and independent maintenance, repair and overhaul (MRO) providers. It also services industrial customers.
About AAR Corp.
AAR CORP. (AAR) is a provider of services and products to the commercial aviation and government and defense markets. The Company operates in two segments: Aviation Services, which consists of supply chain and maintenance, repair and overhaul (MRO) activities, and Expeditionary Services, which includes airlift and mobility activities. Its services and products include aviation supply chain and parts support programs; MRO of aircraft and landing gear; design and manufacture of specialized pallets, shelters and containers; expeditionary airlift services; aircraft modifications, and aircraft and engine sales and leasing. It serves commercial, defense and governmental aircraft fleet operators, original equipment manufacturers and independent service providers around the world. Its landing gear overhaul facility is in Miami, Florida, where it repairs and overhauls landing gear, brakes and actuators for various types of commercial and military aircraft.
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