StandardAero: Largest Independent Aerospace Engine Aftermarket Firm

Aman Budhwar of PenderFund Capital Management presented his investment thesis on StandardAero (US: SARO) at Wide-Moat Investing Summit 2026.

Thesis summary:

StandardAero is the world’s largest independent, pure-play aerospace engine aftermarket (MRO) services provider, with 100-plus years across 50-plus sites. An advantaged compounder, SARO 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%. End markets are roughly 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, with Q1 2026 up 4x YoY.

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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About the instructor:

Aman Budhwar is a Portfolio Manager at PenderFund Capital Management, a firm he joined in February 2022. Aman is passionate about capital markets and has over 25 years of experience in the field of global and emerging market equity research, analysis and stock-picking. Prior to joining Pender, Aman held Senior Equity Analyst positions at leading Canadian fund and asset management firms. Prior to that, he began his career as an Investment Correspondent for India’s leading business daily, where he wrote full-page cover pieces that helped establish a loyal readership. He also worked with a domestic stockbroker in Mumbai before immigrating to Canada in 2001. Throughout his career, Aman has pursued investment opportunities with a long term, differentiated view. He takes a methodical approach to investing and likes to assess both the potential bull and bear cases as well as the probability of each before committing capital to an investment. Over the years, he has developed a process to help identify long term compounders by focusing on key attributes such as a sustainable competitive advantage, high returns on capital, and an attractive free cash flow yield. Aman holds a Bachelor of Commerce from Garhwal University in India and an MBA from the Institute of Management Technology in India. He earned his Chartered Financial Analyst (CFA) designation in 2004. In his free time, he enjoys an active lifestyle, traveling and spending time with his family.

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