Is AAR Corp. overvalued or undervalued?

As of 27 March 2025, AAR Corp. has moved from a fair to a risky valuation grade, indicating a shift towards potential overvaluation concerns. The company's current P/E ratio stands at an alarming 720, significantly higher than the industry average, which is not provided but can be inferred to be much lower given the context. Additionally, the EV to EBIT ratio is 24.56, and the EV to EBITDA ratio is 18.20, both suggesting that the company is priced at a premium relative to its earnings capabilities.
In comparison to its peers, AAR Corp. exhibits a much higher P/E ratio than AeroVironment, Inc., which is at 259.58, and Spirit AeroSystems Holdings, Inc., which is currently in a risky valuation state with a negative P/E ratio. This stark contrast reinforces the notion that AAR Corp. is overvalued in the current market. Furthermore, while the company has shown strong returns over the past five years at 226.97%, its recent performance relative to the S&P 500 indicates a decline over the last year, further supporting the view that it may be overvalued at its current price of 68.37.