AAR Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of aircraft products and service provider AAR (NYS: AIR) are off by as much as 11% today on heavy volume after reporting mixed first quarter earnings last night.

So what: It was a mixed announcement as the company beat analysts' estimates on revenue but fell short on earnings per share. Revenue rose 19% to $479.3 million, compared to the estimate of $453.2 million, while earnings per share of $0.41 didn't quite meet the $0.45 consensus. Meanwhile, gross margin ticked down to 15.6% from 17.3%.

Now what: The company, who competes with larger rival Goodrich (NYS: GR) , said sales to commercial customers increased 40% on strength in spare parts support and the sale of two aircraft. Excluding the aircraft sales, commercial sales grew 21%, while defense sales rose 2%. AAR also announced that it won a contract valued at $77 million, besting four competing bids, to provide airlift support for Navy ships. Clearly investors were expecting more, but with net income rising 22% on a 19% revenue increase, I'm not sure what shareholders are so upset about.

Interested in more info on AAR? Add it to your watchlist byclicking here.

At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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