Sep 28 2026 11:46 PM EST

AAON Shares Advance on Record Q2 Sales and Raised FY26 Guidance

AAON, Inc. (NASDAQ: AAON) reported a 101% year‑over‑year revenue jump to $626.98 million and raised its FY 2026 sales outlook to a range of $2.235‑$2.307 billion. The earnings beat and upgraded guidance coincided with a five‑day price gain of roughly 54%, lifting the share price into the high‑$80s and approaching $90.

Q2 Earnings Beat Analyst Estimates

Adjusted earnings per share came in at $0.69, surpassing the consensus estimate of $0.51 by 35.29%. Net income rose to $56.66 million, and operating income increased 192.1% year‑over‑year. The results lifted the company’s trailing twelve‑month gross margin to 25.6% and EBIT margin to 11.1%.

Backlog Expansion Fuels Growth Outlook

AAON’s total backlog rose to $2.13 billion, a 107.4% increase YoY, driven largely by the BASX data‑center cooling segment, which added $1.62 billion of backlog. Management highlighted a $1 billion addressable market for BASX solutions and pointed to ongoing capacity ramps at the Memphis and Longview facilities as a lever for future margin improvement.

Capacity Ramp and Gross‑Margin Outlook

The company reaffirmed a FY 2026 gross‑margin target of 27‑28%, down from its prior 29‑31% range, reflecting temporary unabsorbed fixed costs from recent capacity investments. Excluding Memphis‑facility overhead, the gross margin would have been 29.6%. Analysts view the ramp‑up as a pathway to higher operating leverage, with SG&A expenses already down 220 bps to 13.7% of sales.

Analyst Sentiment and Valuation Adjustments

Following the earnings release, analysts trimmed price targets to $125‑$135, while DA Davidson maintained a $110 target and a Buy rating. The median consensus target sits at $118, with 75% of analysts rating the stock as Strong Buy. The stock’s trailing P/E is approximately 42.9× and price‑to‑sales around 3.5×, reflecting a premium valuation relative to peers but justified by the accelerated backlog and data‑center exposure.

Risks and Uncertainties

Key risks include margin pressure from rising input costs—diesel fuel averaged $6.45 per gallon—and the expiration of the federal Section 25C HVAC tax credit after 2025, which could dampen new‑construction demand. Short interest rose to roughly 5.6% of float, indicating a modest bearish faction. Additionally, the company’s gross‑margin guidance remains below prior expectations, and any delay in the Memphis/Longview capacity ramp could constrain earnings momentum.