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Loar Holdings Inc. (LOAR)
NYSE:LOAR
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Loar Holdings Inc.
(NYSE:LOAR)
71Outperform
Positive Factors
Earnings
LOAR reported total revenues of $110.4mn, above consensus of $102.5mn by 8%.
End Market Growth
LOAR provided outlook for strong 2025 end market growth for both Commercial OEM and aftermarket and for defense on a pro-forma basis.
Growth Strategy
Since its IPO, LOAR has largely exceeded consensus expectations during quarterly earnings and continued to execute on its strategy for both organic and inorganic growth.
Negative Factors
Financial Leverage
Net Leverage Ended Q3 at 4.0X after the acquisition of Applied Avionics and corresponding debt, with net debt standing at $547MM.
Market Reaction
The market remains hard to please with a Q3 beat and full year EBITDA raise by 5% met with a sell off with shares down 5%.
Loar Holdings Inc. (LOAR) vs. S&P 500 (SPY)
Market Cap
$8.26B
Dividend YieldN/A
Average Volume (3M)591.44K
Price to Earnings (P/E)358.9
Beta (1Y)1.41
Revenue Growth26.88%
EPS GrowthN/A
CountryUS
Employees1,500
SectorGeneral
Sector StrengthN/A
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.25
Shares Outstanding93,556,070
10 Day Avg. Volume828,941
30 Day Avg. Volume591,437
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)15.39
Price to Cash Flow (P/CF)89.10
P/FCF Ratio68.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$91.50Price Target Upside3.59% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Loar Holdings Inc. Business Overview & Revenue Model
Company DescriptionLoar Holdings, Inc. engages in the design, manufacture, and sale of niche aerospace and defense components for aircraft, aerospace and defense systems. The company was founded on August 21, 2017 and is headquartered in White Plains, NY.
How the Company Makes MoneyLoar Holdings Inc. generates revenue primarily through the operations of its subsidiaries, each contributing through sales of specialized products and services in their respective industries. In the aerospace sector, the company earns money by supplying aircraft components and systems to major aerospace manufacturers and defense contractors. Revenue is also derived from long-term contracts and partnerships with governments and corporations for defense-related products. Additionally, Loar Holdings benefits from its industrial manufacturing units, which produce and sell machinery, tools, and equipment to various commercial sectors. Strategic acquisitions and investments in high-growth potential companies further contribute to its earnings by expanding market reach and enhancing operational synergies.
Loar Holdings Inc. Financial Statement Overview
Summary
Loar Holdings Inc. demonstrates strong revenue growth and gross margins but is hindered by negative profitability and declining free cash flow. The balance sheet shows moderate leverage, requiring operational improvements to boost returns and stabilize cash flow.Income Statement
Loar Holdings Inc. shows a strong gross profit margin at 48.6% TTM, indicating efficient production. However, the company is struggling with profitability, evidenced by a negative net profit margin of -1.5% TTM. Revenue growth is impressive at 32.6%, signaling strong demand or market expansion, but the negative net income highlights underlying challenges in cost management or operations.55
Neutral
Balance Sheet
The debt-to-equity ratio is 1.30, suggesting a moderate reliance on debt, typical in the capital-intensive aerospace industry. Stockholders' equity forms 39.8% of total assets, reflecting a solid equity base. However, the return on equity is negative due to net losses, indicating inefficiencies in generating returns for shareholders.60
Neutral
Cash Flow
Loar Holdings Inc. has a declining free cash flow growth rate of -87.3%, which raises concerns over cash generation capabilities. The operating cash flow to net income ratio is positive, indicating better cash generation relative to accounting profits, but free cash flow to net income is low, reflecting capital expenditure pressures.50
Neutral
| Breakdown | ||
| TTM | Dec 2023 | Dec 2022 |
|---|---|---|
| Income Statement | Total Revenue | |
| 378.81M | 317.48M | 239.43M | Gross Profit |
| 184.99M | 154.26M | 111.50M | EBIT |
| 85.29M | 69.49M | 39.46M | EBITDA |
| 126.14M | 107.52M | 81.69M | Net Income Common Stockholders |
| 17.97M | -4.62M | -2.47M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |
| 35.50M | 21.49M | 35.50M | Total Assets |
| 994.52M | 1.05B | 994.52M | Total Debt |
| 496.44M | 545.48M | 496.44M | Net Debt |
| 460.95M | 523.99M | 460.95M | Total Liabilities |
| 572.55M | 632.30M | 572.55M | Stockholders Equity |
| 421.97M | 418.14M | 421.97M |
| Cash Flow | Free Cash Flow | |
| 34.19M | 679.00K | 5.34M | Operating Cash Flow |
| 44.58M | 12.81M | 13.27M | Investing Cash Flow |
| -393.75M | -72.56M | -181.83M | Financing Cash Flow |
| 388.39M | 45.72M | 135.31M |
Loar Holdings Inc. Technical Analysis
Positive
88.33
Price Trends
71.18
Positive
76.14
Positive
73.44
Positive
Market Momentum
-0.42
Negative
56.51
Neutral
76.96
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LOAR, the sentiment is Positive. The current price of 88.33 is above the 20-day moving average (MA) of 71.73, above the 50-day MA of 71.18, and above the 200-day MA of 73.44, indicating a bullish trend. The MACD of -0.42 indicates Negative momentum. The RSI at 56.51 is Neutral, neither overbought nor oversold. The STOCH value of 76.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LOAR.
Loar Holdings Inc. Peers Comparison
Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $7.61B | 21.51 | 12.07% | ― | 22.75% | 117.20% | |
73 Outperform | $9.44B | 33.64 | 28.00% | 0.94% | 8.31% | 14.74% | |
71 Outperform | $8.26B | 358.92 | 2.95% | ― | 26.88% | ― | |
70 Neutral | $5.19B | 25.03 | 12.07% | 0.69% | 7.22% | 22.61% | |
63 Neutral | $8.19B | 768.03 | ― | 14.77% | ― | ||
54 Neutral | $3.91B | -17.92 | -14.99% | 6.44% | 25.52% | -80.16% | |
40 Underperform | $3.85B | ― | 81.63% | ― | 4.44% | -202.63% |
* General Sector Average
Performance Comparison
LOAR
Loar Holdings Inc.
88.33
38.62
77.69%
ERJ
Embraer SA
41.31
17.16
71.06%
MOG.A
Moog
164.22
9.08
5.85%
SPR
Spirit AeroSystems
32.81
-0.60
-1.80%
BWXT
BWX Technologies
103.25
10.30
11.08%
SARO
StandardAero, Inc.
24.50
-8.47
-25.69%
Loar Holdings Inc. Earnings Call Summary
Earnings Call Date: Mar 31, 2025 | % Change Since: 33.89% | Next Earnings Date: May 20, 2025
Earnings Call Sentiment Positive
Loar Holdings reported strong growth in sales and EBITDA, driven by robust performance in defense and aftermarket segments. The outlook for 2025 appears positive with expected continued growth. Despite some challenges with demand management and temporary margin dilutions, the company remains optimistic about future performance.Highlights
Record Sales Achieved
Loar Holdings achieved record sales during the calendar year 2024, with a 15% increase compared to the prior year.
Strong Performance in Defense Segment
Defense sales increased by 39% due to strong demand and increased market share from new product launches.
Aftermarket Business Growth
The aftermarket business continues to grow, now representing 55% of overall sales, up from 52% the previous year.
Adjusted EBITDA Growth
Adjusted EBITDA for Q4 2024 increased by $11 million, with margins remaining strong at 36.4%.
Positive 2025 Outlook
Loar Holdings expects net sales between $480 million to $488 million and adjusted EBITDA between $180 million and $184 million for 2025.
Lowlights
Diluted Q4 Margins
Q4 2024 margins were slightly diluted due to a higher mix of defense sales and ongoing manufacturing facility relocation.
Challenges with Demand Management
The company acknowledged challenges in keeping up with demand due to capacity constraints and supply base limitations.
Company Guidance
During the Loar Holdings Inc. fourth quarter and full year 2024 results call, the company provided guidance for 2025, highlighting several key financial metrics. Loar expects net sales to range between $480 million and $488 million, demonstrating growth from the previous range of $470 million to $480 million. Adjusted EBITDA is projected to be between $180 million and $184 million, with margins improving by 120 basis points to approximately 37.5%. The company anticipates net income to be between $58 million and $63 million, with adjusted earnings per share (EPS) predicted to fall between $0.70 and $0.75. Additionally, capital expenditures are expected to reach approximately $14 million, and the effective tax rate is estimated at 30%. The outlook also includes an interest expense forecast of approximately $28 million, with depreciation and amortization projected at $51 million. Despite potential macroeconomic challenges, Loar is optimistic about its performance, driven by robust demand in commercial and defense segments and successful execution of strategic value drivers.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.