Loar Holdings Inc. (LOAR) Stock Analysis

Loar Holdings’ principal competitive advantage lies in its portfolio of highly engineered, proprietary aerospace and defense components. Approximately 85% of 2024 net sales were derived from proprietary products, and over 50% from the high-margin aftermarket channel. This mirrors the business model of TransDigm, a sector leader, but Loar’s product concentration is lower—no single part accounts for more than 3% of annual revenue—reducing customer and platform risk.

Barriers to entry are substantial. Qualification for aerospace components is costly and time-consuming, often taking years and requiring OEM and regulatory approval. Once qualified, Loar typically retains its position as the sole or primary aftermarket supplier for the 30–50 year lifespan of an aircraft platform. This results in recurring, high-margin revenue streams; aftermarket sales comprised 53% of 2024 revenue, with gross margins near 50%.

Loar’s diversified customer base and platform exposure further insulate it from cyclical downturns. No customer represented more than 13% of 2024 sales, and the top two platforms (Airbus A320, Boeing 737) together accounted for less than 15%. The company’s acquisition track record—18 completed since 2012—demonstrates integration skill and access to niche, IP-rich businesses.

Compared to peers like Heico and TransDigm, Loar is smaller but growing faster, with a 37% sales CAGR since 2012. Its culture emphasizes entrepreneurial autonomy and operational discipline, supporting innovation and margin expansion. However, public company costs and integration risks remain ongoing challenges.