Aman Budhwar of PenderFund Capital Management presented his thesis on StandardAero (US: SARO) at Wide-Moat Investing Summit 2026.
Thesis summary:
StandardAero is the largest independent aerospace engine aftermarket (MRO) services provider, with 100+ years across 50+ sites. An advantaged compounder, it serves about 5,000 customers, books over 77% of revenue under long-term agreements, and holds #1 or #2 positions on platforms representing 80% of revenue. Exclusive or semi-exclusive OEM licenses make it North America’s only independent provider on several platforms.
The moat rests on government certifications, OEM authorizations, and the multi-year upfront investment a provider must commit alongside OEMs like Safran and GE before a platform earns a return. Aman notes ROCE recently sat in the high single digits, near its cost of capital, held down by investments now ramping. Engine Services runs 14-15% EBITDA margins; higher-margin Component Repair, a tenth of revenue but a quarter of EBITDA, nears 29%. Markets are ~60% commercial, ~20% business aviation, ~20% military.
Aman sees a multi-year upcycle from pent-up maintenance, constrained OE capacity, an aging fleet (now near 15 years, up from under 10 a decade ago), and rising outsourcing. The centerpiece is the LEAP engine, sole-source on the 737 MAX with lead share on the A320/A321neo. SARO is the first independent LEAP provider in the Americas, one of seven globally, with 11,000 engines installed and 12,900 in backlog. Management guides LEAP revenue from just over $100M in 2025 toward $1B by decade’s end.
In military and business aviation, SARO holds 80% of OEM-directed MRO on the AE1107 and AE2100 engines and is exclusive worldwide on Honeywell’s HTF7000. Carlyle-era management completed seven accretive acquisitions at mid-to-high single-digit EV/EBITDA, runs net debt/EBITDA at 2.6x, and repurchased $60M in Q1 2026. Aman counters the fuel-price worry: 2026 MRO slots are sold out, fuel shocks hit demand with a 12-18 month lag, and 40% of revenue from business jet and military is fuel-insensitive.
The shares recently traded near $28, or about 22x $1.23 trailing EPS, below Aman’s low-$30s bear case. His DCF frames a bull case near $39 and a probability-weighted intrinsic value near $35, about 30% upside, implying 15.4x 2026E EV/EBITDA and 24.4x P/E, a discount to peers. Aman expects low-double-digit EPS growth and rising FCF as capex winds down. Risks include a Carlyle/GIC overhang selling above $30 since the 2024 IPO, and an October 2026 CEO change to Paul McElhinney.
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Slides
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