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AerCap Holdings NV (AER)
:AER
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Aercap Holdings
(NYSE:AER)
Rating:77Outperform
Price Target:―
Positive Factors
Earnings Performance
AER's EPS exceeded both analyst estimates and consensus, driven by lower leasing expenses.
Stock Buyback
AER authorized $500 million in new buybacks, with a significant $445 million buyback completed, indicating a strong capital return strategy.
Supply and Demand
Commercial aircraft supply will likely be tight to the end of the decade, driven by strong global travel and 4,000-plane production shortfall this decade. This should drive higher lease rates and aircraft values, supporting AER’s aircraft sales/stock buyback strategy.
Negative Factors
Guidance and Surprises
The company's conservative guidance approach has consistently been beaten in prior years, indicating potential for positive surprises.
Market Expectations
Investors have not fully baked in the benefits to AER of a sustained period of demand exceeding supply for commercial aircraft.
Aercap Holdings (AER) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$20.63B
Dividend Yield0.89%
Average Volume (3M)1.37M
Price to Earnings (P/E)10.1
Beta (1Y)0.87
Revenue Growth4.77%
EPS Growth-25.67%
CountryUS
Employees698
SectorIndustrials
Sector Strength92
IndustryRental & Leasing Services
Share Statistics
EPS (TTM)3.68
Shares Outstanding176,566,560
10 Day Avg. Volume1,175,762
30 Day Avg. Volume1,369,679
Financial Highlights & Ratios
PEG Ratio2.27
Price to Book (P/B)1.16
Price to Sales (P/S)0.00
P/FCF Ratio-9.27
Enterprise Value/Market Cap3.13
Enterprise Value/Revenue2.10
Enterprise Value/Gross Profit20.74
Enterprise Value/Ebitda2.96
Forecast
1Y Price Target
$118.00Price Target Upside0.98% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Aercap Holdings Business Overview & Revenue Model
Company DescriptionAerCap Holdings N.V. (AER) is a global leader in aircraft leasing, providing comprehensive leasing and aviation finance solutions to airlines worldwide. Headquartered in Dublin, Ireland, AerCap operates in the aviation sector, offering a wide range of services including aircraft leasing, aircraft trading, and asset management. The company owns one of the largest aircraft fleets globally, comprising both wide-body and narrow-body aircraft, serving major airline customers across different continents.
How the Company Makes MoneyAerCap Holdings primarily generates revenue through leasing aircraft to airlines under long-term lease agreements. Its key revenue streams include operating lease rentals, where airlines pay AerCap for the use of its aircraft over a specified period. Additionally, AerCap engages in aircraft sales and trading, which involves selling aircraft from its portfolio to other lessors, airlines, or investors, contributing to its earnings. AerCap also offers aircraft management services, earning fees from managing aircraft on behalf of third-party owners. The company's profitability is influenced by factors such as aircraft utilization rates, lease rates, and the overall demand for air travel. Strategic partnerships with major airlines and aircraft manufacturers further bolster its revenue generation capabilities.
Aercap Holdings Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 10.78%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call presented strong financial results with robust income and EPS growth, a new share repurchase program, and high utilization and extension rates. However, there were challenges such as delays in the 777 freighter conversion program and ongoing tariff and trade uncertainties. Overall, the positive aspects outweigh the negatives.Q1-2025 Updates
Positive Updates
Strong GAAP Net Income and EPS
AerCap reported GAAP net income of $643 million and earnings per share of $3.48 for Q1 2025.
Adjusted Net Income and EPS Growth
The company achieved an adjusted net income of $679 million and adjusted earnings per share of $3.68.
New Share Repurchase Program
AerCap announced a new $500 million share repurchase program.
High Utilization and Extension Rates
The company reported 99% utilization rates and 84% extension rates.
Successful Aircraft Transitions
AerCap successfully transitioned three midlife 787s on time and on budget, improving rents and credits.
Order and Delivery of LEAP Engines
Ordered 268 new LEAP engines with over 120 delivered and 60 more expected this year.
Strong Liquidity Position
Total sources of liquidity were approximately $20 billion, with a sources-to-uses coverage ratio of 1.8 times.
Upgrade by Fitch
AerCap was upgraded to BBB+ by Fitch, aligning with ratings from other agencies.
High Extension Rates
AerCap reported extension rates of 84% for the quarter, indicating strong demand for their fleet.
Negative Updates
777 Freighter Conversion Delays
The company experienced delays in its 777 freighter conversion program.
Tariff and Trade Uncertainty
Ongoing uncertainty regarding tariffs and trade was noted as a concern for future operations.
Company Guidance
During AerCap's Q1 2025 earnings call, the company reported a strong financial performance with a GAAP net income of $643 million and earnings per share of $3.48. The adjusted net income was $679 million, with adjusted earnings per share at $3.68. Due to these robust results, AerCap raised its full-year 2025 EPS guidance to a range of $9.30 to $10.30 and announced a new $500 million share repurchase program. The company achieved a 99% utilization rate and an 84% extension rate, reflecting strong operational demand. AerCap's liquidity position was solid, with total sources of liquidity at approximately $20 billion and a leverage ratio of 2.4 to 1. The company completed $1.5 billion of financing in the quarter and repurchased over $1 billion of shares year-to-date. Despite some delays in its 777 freighter conversion program, the company expects to be in the top half of its EPS guidance range for the year, underpinned by a strong start to 2025 in terms of net maintenance contribution and other income.Aercap Holdings Financial Statement Overview
Summary
AerCap Holdings demonstrates solid revenue and profit growth, with strong operational efficiency as evidenced by high EBIT and EBITDA margins. However, the company faces challenges with its high leverage and negative free cash flow, largely due to substantial capital investments. These investments may drive future growth, but they also increase financial risk. Balancing debt levels while maintaining growth will be crucial for long-term stability and profitability.Income Statement
The revenue growth rate has been healthy with a consistent upward trajectory over the past few years, though there was a slight dip in the latest TTM compared to the previous annual period. Gross profit margins are strong and show stability, while the net profit margin has improved significantly from losses in earlier years. The EBIT and EBITDA margins reflect strong operational efficiency. However, the recent decrease in gross profit compared to previous years suggests potential cost pressures.75
Positive
Balance Sheet
The company's debt-to-equity ratio is relatively high, indicating a leveraged position, which could pose risks if not managed prudently. However, the equity ratio has shown improvement, suggesting that the company is strengthening its equity base relative to assets. Return on equity has seen significant improvement, driven by rising net income, which is a positive indicator of profitability for shareholders.70
Positive
Cash Flow
Operating cash flow remains robust, but free cash flow has turned negative in recent periods due to large capital expenditures, indicating aggressive reinvestment strategies. The cash flow ratios indicate that while the company generates strong operating cash, its conversion into free cash flow is hindered by high investment spending.65
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 7.98B | 8.00B | 7.57B | 6.91B | 4.59B | 4.49B | Gross Profit |
| 3.11B | 2.62B | 4.34B | 2.11B | 1.30B | 1.28B | EBIT |
| 2.63B | 2.13B | 3.87B | 4.52B | 1.45B | 2.38B | EBITDA |
| 5.23B | 4.71B | 4.55B | 6.91B | 3.19B | 4.03B | Net Income Common Stockholders |
| 2.14B | 2.10B | 3.14B | -838.32M | 1.00B | -297.39M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.49B | 1.21B | 1.76B | 1.60B | 1.73B | 1.25B | Total Assets |
| 71.11B | 71.44B | 71.27B | 69.73B | 74.57B | 42.05B | Total Debt |
| 45.83B | 45.35B | 46.58B | 46.67B | 50.38B | 28.79B | Net Debt |
| 44.35B | 44.14B | 44.95B | 45.07B | 48.65B | 27.54B | Total Liabilities |
| 54.15B | 54.26B | 54.69B | 53.53B | 57.92B | 33.12B | Stockholders Equity |
| 16.96B | 17.18B | 16.59B | 16.12B | 16.57B | 8.86B |
| Cash Flow | Free Cash Flow | ||||
| -2.09B | -1.18B | -970.95M | 1.30B | 1.90B | 946.66M | Operating Cash Flow |
| 5.38B | 5.44B | 5.26B | 5.17B | 3.69B | 2.13B | Investing Cash Flow |
| -4.88B | -3.72B | -3.18B | -2.16B | -23.46B | -712.29M | Financing Cash Flow |
| -720.10M | -2.13B | -2.01B | -3.16B | 20.18B | -1.23B |
Aercap Holdings Technical Analysis
Positive
116.85
Price Trends
105.31
Positive
102.06
Positive
98.41
Positive
Market Momentum
2.88
Positive
71.12
Negative
84.93
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AER, the sentiment is Positive. The current price of 116.85 is above the 20-day moving average (MA) of 113.65, above the 50-day MA of 105.31, and above the 200-day MA of 98.41, indicating a bullish trend. The MACD of 2.88 indicates Positive momentum. The RSI at 71.12 is Negative, neither overbought nor oversold. The STOCH value of 84.93 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AER.
Aercap Holdings Risk Analysis
Aercap Holdings disclosed 43 risk factors in its most recent earnings report. Aercap Holdings reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
We may not be able to continue, or may elect to discontinue, paying dividends, which may adversely affect our share price. Q4, 2024
Aercap Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $6.38B | 9.99 | 9.22% | 1.49% | 2.81% | 15.38% | |
80 Outperform | $31.89B | 8.66 | 27.52% | 1.18% | 4.91% | -27.21% | |
77 Outperform | $20.63B | 10.07 | 12.52% | 0.89% | 4.77% | -25.67% | |
76 Outperform | $27.51B | 7.68 | 33.57% | ― | 5.31% | 35.95% | |
74 Outperform | $29.42B | 18.20 | 22.41% | 1.47% | 5.39% | -15.92% | |
68 Neutral | $19.08B | 39.76 | 5.63% | 2.15% | 3.26% | 27.77% | |
66 Neutral | $4.50B | 12.28 | 5.32% | 248.52% | 4.13% | -12.36% |
* Industrials Sector Average
Performance Comparison
AER
Aercap Holdings
116.85
25.71
28.21%
AL
Air Lease
57.66
12.52
27.74%
DAL
Delta Air Lines
50.95
1.04
2.08%
RYAAY
Ryanair Holdings
57.18
10.29
21.94%
LUV
Southwest Airlines
33.48
4.47
15.41%
UAL
United Airlines Holdings
84.23
31.20
58.83%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.