Loar Holdings Inc.

Wide-moat niche aerospace & defense component maker compounding revenue 23% with top-decile margins, growth and high-IP aftermarket exposure.

Strengths

• Operating margin 21.4% (89th pct), net margin 14.5% (80th), revenue up 23% (76th) and net income up 224% (88th pct)
• ~89% proprietary products and ~55% aftermarket with high qualification barriers to entry; ROE/ROA in 88th/75th pct, strong liquidity (current ratio 4.7)

Risks

• Low absolute ROE (6.1%) and ROA (3.5%) reflect a large post-IPO/acquisition equity and goodwill base
• Variable-rate debt funding an aggressive acquisition cadence and concentration in a handful of customers/the A&D cycle