Critical Contrast: Archer Aviation (NYSE:ACHR) versus AAR (NYSE:AIR)

AAR (NYSE:AIR) and Archer Aviation (NYSE:ACHR) are both mid-cap industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, analyst recommendations and earnings.

Risk and Volatility

AAR has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Archer Aviation has a beta of 3.27, suggesting that its share price is 227% more volatile than the S&P 500.

Institutional and Insider Ownership

90.7% of AAR shares are owned by institutional investors. Comparatively, 59.3% of Archer Aviation shares are owned by institutional investors. 3.1% of AAR shares are owned by company insiders. Comparatively, 5.6% of Archer Aviation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares AAR and Archer Aviation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AAR	5.55%	12.99%	6.47%
Archer Aviation	N/A	-40.74%	-35.93%

Analyst Recommendations

This is a summary of recent recommendations and price targets for AAR and Archer Aviation, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AAR	0	4	4	0	2.50
Archer Aviation	1	3	5	0	2.44

AAR presently has a consensus price target of $140.60, indicating a potential upside of 37.20%. Archer Aviation has a consensus price target of $11.50, indicating a potential upside of 136.38%. Given Archer Aviation’s higher possible upside, analysts plainly believe Archer Aviation is more favorable than AAR.

Earnings and Valuation

This table compares AAR and Archer Aviation”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AAR	$3.49 billion	1.18	$187.70 million	$4.88	21.00
Archer Aviation	$300,000.00	12,487.16	-$618.20 million	($1.08)	-4.50

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

Summary

AAR beats Archer Aviation on 9 of the 14 factors compared between the two stocks.

About AAR

AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide. The Parts Supply segment leases and sells aircraft components and replacement parts. The Repair & Engineering segment provides airframe maintenance services, such as airframe inspection, painting, line maintenance, airframe modification, structural repair, avionics service and installation, exterior and interior refurbishment, and engineering and support services; component repair services comprising maintenance, repair, and overhaul (MRO) services, engine and airframe accessories, and interior refurbishment; and landing gear overhaul services, including repair services on wheels and brakes. This segment also develops specific aircraft components and parts; and designs proprietary designated engineering representative repairs. The Integrated Solutions segment engages in the fleet management and operation of customer-owned aircraft; provision of supply chain logistics services, such as material planning, sourcing, logistics, information and program management, and parts and component repair and overhaul services; and flight hour component inventory and repair services. In addition, the segment provides integrated software solutions comprising Trax, a cloud-based electronic enterprise resource platform, as well as a suite of paperless mobility apps for automating MRO workflows. The Expeditionary Services segment designs, manufactures, and repairs transportation pallets; and containers and shelters for military and humanitarian tactical deployment activities, including armories, supply and parts storage, refrigeration systems, tactical operation centers, briefing rooms, laundry and kitchen facilities, water treatment, and sleeping quarters, as well as engages in provision of engineering, design, and system integration services for specialized command and control systems. AAR Corp. was founded in 1951 and is headquartered in Wood Dale, Illinois.

About Archer Aviation

Archer Aviation Inc., together with its subsidiaries, engages in designs, develops, and operates electric vertical takeoff and landing aircraft for use in urban air mobility. The company was formerly known as Atlas Crest Investment Corp. and changed its name to Archer Aviation Inc. The company is headquartered in San Jose, California.