{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "SARO",
  "name": "StandardAero, Inc.",
  "url": "https://frontierpicks.com/dossiers/SARO/",
  "json_url": "https://frontierpicks.com/dossiers/SARO.json",
  "status": "WATCHLIST",
  "current_conviction": "MEDIUM",
  "archetype": {
    "code": "a2",
    "n": 2
  },
  "current_thesis": "StandardAero's engine-overhaul profits are growing faster than revenue: third-quarter 2026 adjusted EBITDA rose 15% and the company raised 2026 guidance again on 5 November 2026. The fourth-quarter report, expected around 26 February 2027, shows whether those margin gains and the cash flow target hold.",
  "invalidation_trigger": "A daily close below $25.00, under the 2026-11-05 report-day close, which would erase the post-report rally despite the expanded buyback. Full-year 2026 adjusted EBITDA below the $905 million low end of guidance would also show the case failing.",
  "catalyst_date": "2026-12-31",
  "portfolio": null,
  "pick": null,
  "themes": [
    "defense-aerospace"
  ],
  "tags": [],
  "sources": [],
  "caveats": [],
  "source_links": [
    {
      "title": "StandardAero, Inc. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0002025410/000202541026000019/saro-ex99_1.htm",
      "date": "2026-11-05"
    },
    {
      "title": "StandardAero, Inc. - Form 10-Q - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0002025410/000202541026000022/saro-20260930.htm",
      "date": null
    },
    {
      "title": "StandardAero Announces Third Quarter Results",
      "url": "https://ir.standardaero.com/news-events/press-releases/detail/141/standardaero-announces-third-quarter-results",
      "date": null
    },
    {
      "title": "StandardAero Q3 Earnings: $93 Million Net Income and $1 Billion Share Repurchase Authorization",
      "url": "https://www.panabee.com/news/standardaero-earnings-q3-2026",
      "date": null
    },
    {
      "title": "StandardAero Announces CEO Succession Plan",
      "url": "https://standardaero.com/standardaero-announces-ceo-succession-plan/",
      "date": "2026-06-02"
    },
    {
      "title": "StandardAero Announces Pricing of Its Secondary Offering of 50000000 Shares of Common Stock by Affiliates of The Carlyle Group Inc. and GIC",
      "url": "https://www.businesswire.com/news/home/20260127474595/en/standardaero-announces-pricing-of-its-secondary-offering-of-50000000-shares-of-common-stock-by-affiliates-of-the-carlyle-group-inc.-and-gic",
      "date": "2026-01-27"
    }
  ],
  "evidence": [
    {
      "claim": "Q3 2026 revenue $1,557.4M, +4.0% YoY; adjusted EBITDA $224.9M, +15.0%, margin 14.4% vs 13.1%; adjusted EPS $0.39 vs $0.30; GAAP EPS $0.28",
      "source": "StandardAero Q3 2026 8-K exhibit 99.1",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Engine Services adjusted EBITDA $205.1M, +24.0%, margin 15.0% vs 12.5%; Component Repair adjusted EBITDA $48.6M, −9.9%, margin 25.8% vs 30.7%",
      "source": "StandardAero Q3 2026 8-K exhibit 99.1",
      "as_of": "2026-11-05"
    },
    {
      "claim": "FY2026 adjusted EPS guidance raised to $1.57–$1.62 from $1.50–$1.57; revenue guidance $6.525–$6.645B; adjusted EBITDA $905–$920M; adjusted free cash flow $270–$300M",
      "source": "StandardAero Q3 2026 8-K exhibit 99.1; Benzinga 2026-11-05",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Repurchase authorisation raised by $560M to $1.0B; $160.1M repurchased to date incl. $50.1M in Q3; intended $350M accelerated share repurchase with Morgan Stanley",
      "source": "StandardAero Q3 2026 8-K exhibit 99.1",
      "as_of": "2026-11-05"
    },
    {
      "claim": "Net debt $2,307.9M, 2.7x LTM adjusted EBITDA vs 2.9x a year earlier; nine-month operating cash flow $81.7M vs −$6.3M; Q3 adjusted free cash flow $99.2M",
      "source": "StandardAero Q3 2026 8-K exhibit 99.1",
      "as_of": "2026-09-30"
    },
    {
      "claim": "UBS raised its price target to $34 from $32 (Buy) on 2026-11-06; BTIG reiterated Buy with a $35 target on 2026-11-09",
      "source": "Benzinga analyst notes, 2026-11-06 and 2026-11-09",
      "as_of": "2026-11-09"
    },
    {
      "claim": "Chief Legal Officer Michael Kaplan exercised options on 2,941 shares and sold 780 shares at $21.24",
      "source": "SEC Form 4 filed 2026-10-16",
      "as_of": "2026-10-16"
    },
    {
      "claim": "Air Corsica selected StandardAero for LEAP-1A performance restoration shop visits on its A320neo fleet",
      "source": "Company announcement via Benzinga, 2026-10-27",
      "as_of": "2026-10-27"
    }
  ],
  "view_changes": [],
  "frame": null,
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    "sector": "Industrials",
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      "reason": null,
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      "figures": {
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        "operating_margin": {
          "status": "ok",
          "quarters": [
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              "end": "2026-09-30",
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              "restated": null,
              "pct": 10.3
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              "restated": null,
              "pct": 9.2
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              "restated": null,
              "pct": 8.9
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        },
        "pretax_income": {
          "status": "ok",
          "end": "2026-09-30",
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          "value_musd": 120.6
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        "net_income": {
          "status": "ok",
          "end": "2026-09-30",
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          "four_quarters_end": "2026-09-30",
          "value_musd": 92.8,
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        "operating_cash_flow": {
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          "value_musd": 404.7
        },
        "capital_spending": {
          "status": "ok",
          "end": "2026-09-30",
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          "value_musd": 83
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        "free_cash_flow": {
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          "value_musd": 321.7
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          "end": "2026-09-30",
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          "base_end": "2025-09-30",
          "pct": -1
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          "value_musd": 191.3
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          "composition": "non-current long-term debt plus current maturities"
        },
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          "value_musd": 9101.9
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        "enterprise_value": {
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          "value_musd": 11381.4
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          "multiple": 1.8
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          "multiple": 18.3
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          "close_date": "2026-11-13",
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          "basis_filed": "2026-11-06",
          "multiple": 26.1
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          "multiple": 3.2
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          "pct": 3.5
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      "settlement": "2026-10-15",
      "published": "2026-10-26",
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  "body_markdown": "## Current Thesis\n\nStandardAero's engine-overhaul profits are growing faster than its revenue. On 2026-11-05 the company raised its 2026 outlook for the second time and more than doubled its buyback authorisation. The rating is Medium because the earnings trend and the company's own buying support the shares, while slow revenue and weak cash conversion are still open questions. The fourth-quarter report, expected around 2027-02-26, settles the case. It shows whether the company reached its raised 2026 target of $905 million to $920 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation), and whether Engine Services margins carry into 2027.\n\nThird-quarter 2026 revenue was $1,557.4 million, up 4.0% year on year, according to the company's 8-K exhibit. Adjusted EBITDA rose 15.0% to $224.9 million, and the margin widened to 14.4% from 13.1%. Adjusted diluted earnings per share (EPS) were $0.39, up from $0.30 a year earlier and above the $0.38 estimate (Benzinga, 2026-11-05). Revenue is the weak point. It missed the $1.562 billion consensus, and commercial aerospace revenue grew only 1.3%.\n\nThe price shows a recovery but no re-rating. The shares closed at $27.56 on 2026-11-12, up from a 52-week closing low of $19.76 on 2026-10-14. That close is 20.1% below the 52-week intraday high of $34.48 set on 2026-01-20. It is also below the $31.00 price at which Carlyle and GIC affiliates sold 50 million shares in January 2026.\n\nLeadership is changing hands. Paul McElhinney, formerly chief executive of GE Aviation Services, became chief executive on 2026-10-01. Russell Ford remains executive chairman through 2026-12-31, according to the company's 2026-06-02 release.\n\n## Bull Case\n- **Engine Services margins at a record.** Engine Services adjusted EBITDA rose 24.0% to $205.1 million in the third quarter of 2026 on revenue up 3.5%. The segment margin widened to 15.0% from 12.5% (company 8-K, 2026-11-05).\n- **Guidance raised a second time.** On 2026-11-05 the company raised full-year 2026 adjusted EPS guidance to $1.57–$1.62 from $1.50–$1.57, against a $1.51 consensus. Revenue guidance rose to $6.525–$6.645 billion from $6.375–$6.500 billion (Benzinga, 2026-11-05).\n- **Buyback capacity more than doubled.** The board raised the repurchase authorisation by $560 million to $1.0 billion on 2026-10-28. The company intends to enter a $350 million accelerated share repurchase with Morgan Stanley, and had repurchased $160.1 million of shares to date, including $50.1 million in the third quarter (company 8-K, 2026-11-05).\n- **Third-quarter cash flow turned up.** Adjusted free cash flow was $99.2 million in the third quarter of 2026. Operating cash flow for the first nine months was $81.7 million, against an outflow of $6.3 million a year earlier (company 8-K, 2026-11-05).\n- **Leverage is falling.** Net debt was $2,307.9 million on 2026-09-30, or 2.7 times trailing adjusted EBITDA, down from 2.9 times a year earlier (company 8-K).\n- **Analyst targets sit above the shares.** BTIG reiterated its Buy rating and $35 target on 2026-11-09. UBS raised its target to $34 from $32 on 2026-11-06 (Benzinga).\n\n## Bear Case\n- **Revenue growth is slow.** Third-quarter revenue of $1,557.4 million missed the $1.562 billion estimate, and commercial aerospace revenue grew 1.3% (company 8-K; Benzinga, 2026-11-05). GAAP EPS of $0.28 missed the $0.31 estimate.\n- **Component Repair margins compressed.** Component Repair Services adjusted EBITDA fell 9.9% to $48.6 million even as segment revenue rose 7.3%. Its margin fell to 25.8% from 30.7% (company 8-K, 2026-11-05).\n- **Most of the year's cash is still due.** Nine-month operating cash flow was $81.7 million, and third-quarter free cash flow including intangible purchases was an outflow of about $81.0 million. Full-year guidance calls for $270–$300 million of adjusted free cash flow, which leaves a large fourth-quarter requirement (company 8-K, 2026-11-05).\n- **Insiders are sellers, not buyers.** Chief Legal Officer Michael Kaplan exercised options on 2,941 shares on 2026-10-15 and sold 780 shares at $21.24 on 2026-10-16 (SEC Form 4). No open-market insider purchase appears in SEC Form 4 filings since 2026-08-14.\n- **Sponsor share supply remains.** Carlyle and GIC affiliates sold 50 million shares at $31.00 in January 2026 (company release, 2026-01-27), and further sales by the sponsors would add supply.\n- **Analysts trimmed targets before the report.** RBC cut its target to $32 from $34 on 2026-10-28, and CIBC lowered its target to $35 on 2026-10-26 (Benzinga).\n\n## Setup & Price Structure\nThe shares closed at $27.56 on 2026-11-12, down 1.2% over three months. That close sits above both the 50-day moving average of $23.01 and the 200-day moving average of $26.37. The 50-day average remains below the 200-day, which shows how deep the September–October decline went.\n\nThe post-report rally started from the $25.30 close on 2026-11-05, the day of the report. The shares closed at $27.63 on 2026-11-06, when UBS raised its target, and reached $28.97 on 2026-11-09. They have since eased to $27.56 on 2026-11-12, giving back part of the move while holding above the 200-day average.\n\nAbove the last close, the $31.00 January 2026 secondary-offering price is the nearest reference. The 52-week intraday high of $34.48 from 2026-01-20 is the next, and BTIG's $35 and UBS's $34 targets sit near it. No company report is scheduled before the fourth-quarter release. The planned $350 million accelerated repurchase is the main source of company buying in the meantime.\n\n## Catalyst Calendar\n\n- **2026-12-31:** Russell Ford's executive chairman term ends; Paul McElhinney becomes chairman on 2027-01-01. Completes the leadership handover and puts full control under the new chief executive before the first 2027 guidance.\n- **~2027-02-26 (est.):** Q4 and full-year 2026 report with first 2027 guidance. Shows whether the raised $905–$920M 2026 adjusted EBITDA and $270–$300M adjusted free cash flow guidance were met, and whether Engine Services margin gains carry into 2027.\n\n## What Would Change Our Mind\n\nA daily close below $25.00, under the 2026-11-05 report-day close, which would erase the post-report rally despite the expanded buyback. Full-year 2026 adjusted EBITDA below the $905 million low end of guidance would also show the case failing.\n\nThe risks this note tracks, each with what would confirm it:\n\n- Commercial aerospace demand stays flat and revenue keeps missing consensus. Confirmed by: Commercial aerospace revenue growth staying near the 1.3% seen in Q3 2026, with Q4 2026 revenue below consensus.\n- Component Repair Services margin compression persists or spreads. Confirmed by: Component Repair margin at or below the 25.8% Q3 2026 level, or full-year segment adjusted EBITDA below the $205–$210M guide.\n- Free cash flow falls short of the raised earnings. Confirmed by: Full-year 2026 adjusted free cash flow below the $270–$300M guidance range at the Q4 report.\n- Sponsor or insider selling adds share supply. Confirmed by: A new Carlyle or GIC secondary offering, or further executive sales reported in SEC Form 4 filings.\n- New leadership resets 2027 expectations lower. Confirmed by: First 2027 guidance at the Q4 report implying adjusted EBITDA growth below the 2026 rate.\n\n## Correlation Notes\nStandardAero is grouped with defense and aerospace names such as Karman Holdings (KRMN) and BETA Technologies (BETA). Its earnings depend mostly on commercial engine shop visits, such as the LEAP-1A overhaul work Air Corsica awarded on 2026-10-27. Defense budget news therefore moves it less than it moves Karman. Airline capacity, engine-maker aftermarket comments and sponsor share sales are the inputs most likely to move the shares with or apart from the group. A broad rally in the defense group would not offset a fourth-quarter shortfall in Engine Services margins.",
  "first_seen": "2026-11-10",
  "last_analyzed": "2026-11-12T23:30:31+00:00",
  "last_synthesized": "2026-11-12",
  "date_modified": "2026-11-12",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}