StandardAero, Inc. (SARO): what the price assumes

In the published model solve dated 2026-Q2, anchored at $31.00, StandardAero, Inc. (SARO) is priced for today's economics sustained for ~5.6 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-01.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/SARO

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 10: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.3% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.7 years.

Reconcile: at the x-ray's 9.3% required return this reads ~20.2%/yr; the models below use their own rates.

How unusual the bet is: elevated

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.

Per-Model Detail (n=13)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• StandardAero sells recurring engine maintenance, not engines: its business is the shop visit an aircraft engine legally must undergo on a schedule set by the OEM, the regulator, and the military, and a large share of that work is performed as an authorized subcontractor for the OEMs themselves, revenue the FY2025 10-K describes as "derived from services we provide on behalf of OEMs as a subcontractor and authorized" shop.
• The balance sheet is the constraint: net debt of about $2.1 billion sits at roughly 3.8 times a year's operating profit, interest coverage is about 3.4 times, and the share count has grown around 7% a year, so the buyback announced this quarter is running against dilution rather than shrinking the count.
• Next to watch: the leadership handoff, with Paul McElhinney set to take the CEO role on October 1, 2026 as Russell Ford moves to executive chairman, against a raised full-year outlook management set at revenue of $6.325 to $6.45 billion for FY2026.

Bull Case

Start with what the company does with its cash, because it tells you where management thinks the value is. In the first quarter of FY2026 StandardAero bought back about 2.0 million shares for $60.1 million and, in the same breath, announced the acquisition of Unified Turbines to add hot-section component-repair capability. Both moves point the same direction: deeper into the aftermarket. The company is not buying growth in new markets; it is buying more of the recurring repair work it already does and retiring a few shares at the edges. That is a management team that treats its own service franchise as the asset worth owning.

The franchise itself is unusually sticky. An aircraft engine cannot skip its scheduled overhaul, and the schedule is not set by StandardAero or its customers. The 10-K puts the driver plainly: "Manufacturer specifications, government regulations and military maintenance regimens generally require" the work, which means demand is written into the certification and the maintenance manual rather than into a sales pitch. A large piece of that demand comes through the OEMs, where StandardAero operates as an authorized shop performing "services we provide on behalf of OEMs as a subcontractor and authorized" contractor. Being inside the OEM's authorized network is a barrier a new entrant cannot buy; it has to be granted.

The engine side is where the operating leverage shows. Engine Services segment adjusted EBITDA rose to $706.9 million for the year ended December 31, 2025, up 15.7% from a year earlier "Engine Services Segment Adjusted EBITDA increased $96.0 million, or 15.7%, to $706.9 million for the year ended December 31, 2025, from $610.9 million for the year ended December 31," 2024. The growth came with real investment, not just volume: the segment is carrying LEAP and CFM transformation costs as it builds capacity on newer engine platforms alongside "growth on our mid-size and super mid-size business aviation platforms and select military transport programs." Those next-generation platforms are the installed base that feeds future shop visits as the fleet matures, and the company is paying now to be positioned to service them. Management guided Engine Services margins above 14% for the balance of the year and raised the business-aviation end-market growth outlook to a high-single-digit to low-double-digit range. Demand across all three end markets grew double digits in the quarter. For a business whose revenue arrives on a maintenance schedule, that is the bull case in one line: the fleet keeps flying, the engines keep coming in, and StandardAero is the shop with the authorizations to open them.

Bear Case

Aftermarket demand looks recession-proof from a distance, but it still rides a cycle, and this one is running warm. Shop-visit volumes track fleet utilization and fleet age, both near the strong end of their range right now: management is raising end-market growth guidance and flagging that fleet growth "is expected to drive a continued increase in demand for business jet engine maintenance services," while noting that supply-chain disruption across its end markets has been a live issue. The bear reading is that today's double-digit growth sits closer to peak throughput than to a sustainable baseline. When new-aircraft deliveries eventually catch up and the oldest engines retire, the volume of overhauls normalizes, and a business priced for continued acceleration re-rates on the way down.

The price is where that risk concentrates. At today's level the market is paying about 21 times company-wide operating income, and that multiple is defended by only one family of valuation methods. The asset-based and earnings-power lenses both land at roughly a third of the current price; peer-multiple methods land well below it; only the forward-growth methods, which credit tomorrow's compounding, reach it. Put plainly, the price requires StandardAero to hold operating growth at close to its self-funding ceiling for about five years, and among comparable fast-growers only about 30% sustained a pace like that even over a five-year window. The bet is not that the company is bad. It is that the market has already priced several years of uninterrupted execution, and the base rate for delivering it is roughly one in three.

Underneath the multiple sits leverage that the growth has to service. Net debt is about $2.1 billion, or roughly 3.8 times a year's operating profit, and interest coverage is about 3.4 times, which is adequate but not comfortable. Most of the debt is variable-rate: the company refinanced its senior secured term loans in 2024, replacing the "$2,562.1 million existing senior secured term loans then-outstanding" and pricing the facilities off floating benchmarks with an applicable margin. That structure means interest expense moves with rates the company does not control, and it competes directly with the buyback for the same free cash flow. The share count, meanwhile, has grown around 7% a year, so the repurchase announced this quarter is offsetting dilution rather than shrinking the base. And the demand that anchors the whole thesis runs partly through the OEMs: a significant portion of revenue is earned as an authorized subcontractor performing work "on behalf of OEMs," which means the same partners who supply the authorizations also set terms and could, over time, choose to keep more of that aftermarket for themselves. The customer contracts carry their own teeth, with provisions that "could cause us to incur penalties, be liable for liquidated or actual damages and incur unanticipated expenses" on delivery and performance. None of these is a crisis today. Together they are the reasons the required five years of clean compounding might not arrive intact.

Valuation

The clearest way to read StandardAero's price is to ask what it assumes and then check that assumption against the company's own economics. At $27.73 (July 1, 2026) the market is paying about 21 times company-wide operating income, and inverting that price yields a specific bet: operating growth held at close to the self-funding ceiling for roughly five years. This is a five-year durability assumption, not a longer one, and it is demanding. Against the history of comparable fast-growers, only about 30% sustained a pace like that over a window of that length. The price is not pricing a certainty; it is pricing a bet that has come true for roughly one company in three.

The valuation methods split cleanly on whether that bet is worth the price, and the split is the whole point. Group them into families and only one reaches the current level. The asset-based methods, built on a book value of about $8.07 a share and a trailing return on equity near 10.9%, land at roughly a third of the price. The earnings-power methods, which capitalize normalized profit with no growth, land lower still. Peer-multiple methods, anchored on sector medians, sit well below the price as well. Only the forward-growth methods reach it, and the way they get there is instructive: the exit-multiple cash-flow model holds today's EV/EBITDA multiple flat for the projection, and the future-market-cap model tapers 15% revenue growth. The price is defensible only if you credit years of compounding that the static frames, by construction, cannot see. That spread between the value lenses and the growth lenses is the premium the market is paying for durability.

Solvency is where the downside gets its shape. Net debt of about $2.1 billion runs to roughly 3.8 times a year's operating profit on a pre-tax basis, interest coverage is about 3.4 times, and the company is not burning cash. The refinanced term loans that replaced the prior "$2,562.1 million" facility carry variable rates, so debt service floats with the rate environment rather than sitting fixed. The share count has grown around 7% a year, which means the buyback works against dilution rather than compounding a shrinking base. The balance sheet can carry the business as it stands; what it does not do is add a cushion to a price already leaning entirely on the growth family. For context on where the street sits, analyst price targets cluster in the mid-thirties, with a consensus near $37. That range credits more of the forward growth than the static methods here do, which is the same disagreement the method families already map, now voiced by sell-side desks rather than models.

Catalysts

The near-term calendar is anchored by a leadership transition on a fixed date. Russell Ford, CEO for the past thirteen years, will hand the role to Paul McElhinney on October 1, 2026 and move to executive chairman, with McElhinney set to add the chairman title in January 2027. McElhinney arrives with three and a half decades in the industry, including senior roles at GE Aviation Services and GE Power Services, and the board affirmed the full-year outlook alongside the announcement, signaling continuity rather than a strategic reset. Succession at a company this dependent on OEM relationships is worth watching precisely because those relationships are personal as well as contractual.

The operating story going in is one of raised guidance. First-quarter FY2026 revenue grew 13.3% to $1.63 billion with double-digit growth across all three end markets, and management lifted the full-year targets to revenue of $6.325 to $6.45 billion, adjusted EBITDA of $875 to $905 million, and free cash flow of $270 to $300 million. The business-aviation end market saw its growth outlook raised to a high-single-digit to low-double-digit range, and Engine Services margins are guided above 14% for the balance of the year. The Unified Turbines acquisition announced in the quarter adds hot-section component-repair capability, extending the aftermarket footprint rather than diversifying away from it.

Sell-side sentiment is constructive but not uniform, which is itself worth watching as the next prints land. UBS upgraded the stock to Buy with a $34 target, and CIBC raised its target to $39 on an outperform rating; against that, Jefferies moved to Hold and trimmed its target to $30. The spread between the bulls in the high-thirties and the more cautious desks near $30 tracks the same question the valuation work raises: how much of the next several years of compounding is already in the price. The next quarterly report is the near-term test of whether the raised guidance holds.

Peer Cohorts (Per Segment, With Filing Citations)

Engine Services (reported)

• HEI (HEICO CORPORATION)
• FY2025 10-K: …and business aircraft, aircraft engines and related components and equipment. Due in large part to our established industry presence, we enjoy strong customer relations, name recognition and repeat business. We sell our products to a broad customer base consisting of domestic and foreign commercial and cargo…
• FY2025 10-K: …to other aerospace products and services sold by the Flight Support Group, we compete with both the leading jet engine and aircraft component OEMs and a large number of machining, fabrication, distribution and repair companies, some of which have greater financial and other resources than we do. Competition is based…
• AIR (AAR CORP)
• FY2025 10-K: …treasury and human resources with a portion of the costs allocated to our operating segments. Significant expenses for each segment are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended May 31, 2025 ​ ​ Parts ​ Repair & ​ Integrated ​ Expeditionary ​ Supply Engineering Solutions Services Sales ​ $…
• FY2025 10-K: …of customer-owned aircraft is performed for the U.S. Department of State ("DoS") under the INL/A WASS contract. We are the prime contractor on this ten-year performance-based contract which began in fiscal 2018. Our services under the contract include operating and maintaining the global DoS fleet of fixed- and…
• FTAI (FTAI AVIATION LTD.)
• FY2025 10-K: 024 and 2023, respectively, and is included in Interest expense. Revenues - Revenues are within the scope of ASC 606, Revenue from contracts with customers, and ASC 842, Leases , unless otherwise noted. The Company has elected to exclude sales tax and other similar taxes from revenues. Aerospace products revenue -…
• FY2025 10-K: …when a performance obligation is satisfied by transferring control of the serviceable engine or module to the 2025 Partnership, along with corresponding costs of sales. Refer to Note 12 "Affiliate Transactions and Former Management Agreement" for additional information on the 2025 Partnership and the strategic…
• WLFC (WILLIS LEASE FINANCE CORP)
• FY2025 10-K: …Engines Holding AG, SMBC Aero Engine Lease B.V., and StandardAero, Inc. Our primary competitors generally have significantly greater financial, personnel and other resources, as well as a physical presence in more locations, than we do. In addition, competing engine lessors may have lower costs of capital and may…
• FY2025 10-K: …business. We operate in a global market in which our engines are easily transferable among lessees located in many countries, which stabilizes demand and allows us to recover from a loss of a customer. We provide other engine leasing-related services such as engine storage, Part 145 maintenance and aircraft tear down…
• TDG (TransDigm Group Incorporated)
• FY2025 10-K: …handling, delivery systems and electronic components used in the generation, amplification, transmission and reception of microwave signals. Primary customers of this segment are engine and power system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies and repair depots.…
• FY2025 10-K: …in the generation, amplification, transmission and reception of microwave signals, and single and two-stage servo values. Primary customers of this segment are engine and power system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies and repair depots. Products are sold in…
• LOAR (Loar Holdings Inc.)
• FY2025 10-K: …which is generally upon shipment of goods to the customer. The Company sells specialty aerospace components based on a customer purchase order, which generally includes a fixed price per unit. The Company satisfies the single performance obligation generally upon shipment of the goods, as this is when contractual…
• FY2025 10-K: , LMB provides the market with 2,000+ unique fans, blowers, motors and specialized rotating machines. See Note 2, Acquisitions, of the Notes to Consolidated Financial Statements for further information. Recent Developments On January 21, 2026, the Company acquired Harper Engineering for $250 million in cash. Founded…

Component Repair Services (reported)

• HEI (HEICO CORPORATION)
• FY2025 10-K: …to other aerospace products and services sold by the Flight Support Group, we compete with both the leading jet engine and aircraft component OEMs and a large number of machining, fabrication, distribution and repair companies, some of which have greater financial and other resources than we do. Competition is based…
• FY2025 10-K: …and business aircraft, aircraft engines and related components and equipment. Due in large part to our established industry presence, we enjoy strong customer relations, name recognition and repeat business. We sell our products to a broad customer base consisting of domestic and foreign commercial and cargo…
• LOAR (Loar Holdings Inc.)
• FY2025 10-K: …which is generally upon shipment of goods to the customer. The Company sells specialty aerospace components based on a customer purchase order, which generally includes a fixed price per unit. The Company satisfies the single performance obligation generally upon shipment of the goods, as this is when contractual…
• FY2025 10-K: …and continue to face and the risks and limitations that could harm our prospects, see "Cautionary Note Regarding Forward-Looking Statements," "Summary of Risk Factors" and "Risk Factors" included elsewhere in this Annual Report on Form 10-K. Competitive Strengths As a specialized supplier in the aerospace and defense…
• TDG (TransDigm Group Incorporated)
• FY2025 10-K: …handling, delivery systems and electronic components used in the generation, amplification, transmission and reception of microwave signals. Primary customers of this segment are engine and power system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies and repair depots.…
• FY2025 10-K: …that they will have a reduced incentive to certify another supplier because of the cost and time of the technical design and testing certification process. In addition, we believe that the availability, dependability and safety of our products are reasons for our customers to continue long-term supplier…
• CW (CURTISS-WRIGHT CORPORATION)
• FY2025 10-K: …production orders to begin materializing by the middle of the next decade. General Industrial We derive revenue from our widely diversified offering to the general industrial market, which primarily consists of electronic sensors and control systems, electro-mechanical actuation, and surface treatment services. We…
• FY2025 10-K: …The commercial aerospace business is primarily impacted by OEM production rates of new aircraft, while the defense business is primarily impacted by government funding and spending on new programs, primarily driven by the U.S. Government. Certain industrial businesses within our Aerospace & Industrial segment are…
• HWM (HOWMET AEROSPACE INC.)
• FY2025 10-K: …partially offset by lower volumes in the commercial transportation market. Product price increases are in excess of material and inflationary cost pass through to our customers. Sales for 2024 were $7,430 compared with $6,640 in 2023, an increase of $790, or 12%. The increase was primarily due to higher sales in the…
• FY2025 10-K: …Ciudad Acuña (2) Engine Products; Fastening Systems Aerospace Castings/Rings and Fasteners Monterrey Forged Wheels Forgings Morocco Casablanca (2) Fastening Systems Fasteners United Kingdom Exeter (2) Engine Products Aerospace and Gas Turbine Castings and Alloy Glossop Engine Products Metal, Billets Ickles Engine…
• AIR (AAR CORP)
• FY2025 10-K: …treasury and human resources with a portion of the costs allocated to our operating segments. Significant expenses for each segment are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended May 31, 2025 ​ ​ Parts ​ Repair & ​ Integrated ​ Expeditionary ​ Supply Engineering Solutions Services Sales ​ $…
• FY2025 10-K: …global reach and long-standing customer relationships position us to meet market demand for these products. We also distribute new OEM-supplied replacement parts to aircraft operators, airlines, government customers and other MRO companies across the world. Our parts are supplied to narrow-body, wide-body and…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.