Cramer Sounds Caution on AAR Corp., Citing 'Too High' Gross Yield
Aviation services and parts supplier AAR Corp. (NYSE: AIR) came under scrutiny during a recent episode of CNBC's "Mad Money," where host Jim Cramer voiced concerns over the stock's valuation metrics. Responding to a viewer inquiry on January 27, Cramer pointed to the company's elevated gross yield as a key reason for caution.
A technical chart of the stock market. Photo by Energepic from Pexels
"I've been worried about this at times because, believe it or not, the gross yield is too high—and this is one of those times," Cramer stated. "That yield's 15%." AAR Corp. provides critical aircraft components, maintenance, and refurbishment services to both commercial and defense aviation sectors, positioning it as a key player in the aerospace supply chain.
Analysts note that while a high yield can sometimes signal undervaluation, it may also reflect market skepticism about a company's future earnings or sustainability of dividends—especially in industries sensitive to economic cycles and regulatory shifts. The aviation aftermarket has faced headwinds from supply chain disruptions and fluctuating demand, though long-term growth drivers in global air travel and defense spending remain intact.
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Disclosure: None. This article was originally published at Insider Monkey.
What Readers Are Saying
Michael R., Portfolio Manager (Chicago): "Cramer's right to flag the yield. In this sector, a number that high often comes with hidden risks—maybe margin pressure or contract uncertainties. I'd want to dig into their cash flow stability before jumping in."
Sarah Chen, Aerospace Analyst (Dallas): "This overlooks AAR's strong contract backlog and its role in the defense upcycle. The yield might be high, but their service segment is showing resilient demand. It's more a timing call than a fundamental one."
Dave "StockSkeptic" on Twitter: "Here we go again—Cramer cherry-picking one metric to sound smart. AAR's been executing well. Maybe he's just trying to talk down the price so his buddies can load up. The 15% yield story is overly simplistic."
Linda P., Retired Engineer (Seattle): "As a long-term holder, I'm not swayed by short-term commentary. The aviation industry is recovering, and AAR's niche is essential. The yield is a bonus while we wait for broader market recognition."