Aercap Holdings (AER) AI Stock Analysis

• Market Cap: $19.94B
• Dividend Yield: 0.95%
• Average Volume (3M): 2.02M
• Price to Earnings (P/E): 9.2
• Beta (1Y): 0.92
• Revenue Growth: 4.77%
• EPS Growth: -25.67%
• Country: US
• Employees: 698
• Sector: Industrials
• Sector Strength: 77
• Industry: Rental & Leasing Services
• EPS (TTM): 3.68
• Shares Outstanding: 186,783,220
• 10 Day Avg. Volume: 1,700,084
• 30 Day Avg. Volume: 2,020,651
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 3.20
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 24.40
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $116.17
• Price Target Upside: 7.62% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7

AerCap's overall stock score reflects strong financial performance with solid revenue and profit growth, bolstered by positive earnings call outcomes and technical indicators pointing to upward momentum. Despite challenges like high leverage and negative free cash flow, the company's valuation suggests an attractive investment opportunity. The recent earnings call highlighted robust operational results and strategic initiatives, supporting a favorable outlook.

Positive Factors

Capital Return Strategy

AER authorized $500 million in new buybacks, with a significant $445 million buyback completed, indicating a strong capital return strategy.

Earnings Performance

AER's EPS exceeded both analyst estimates and consensus, driven by lower leasing expenses.

Gain on Sale Margin

AerCap's gain on sale margin was strong this quarter at 43%, significantly above the long-term average, indicating strong demand.

Share Repurchase Program

AerCap announced a new $1bn share repurchase program, which, if fully utilized, would have a ~7% accretive impact on EPS.

Negative Factors

Aircraft Supply Constraints

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.

Market Perception

Investors have not fully baked in the benefits to AER of a sustained period of demand exceeding supply for commercial aircraft.

Aercap Holdings Business Overview & Revenue Model

Company Description

AerCap Holdings N.V. engages in the lease, financing, sale, and management of commercial flight equipment in China, Hong Kong, Macau, the United States, Ireland, and internationally. The company offers aircraft asset management services, such as remarketing aircraft and engines; collecting rental and maintenance rent payments, monitoring aircraft maintenance, monitoring and enforcing contract compliance, and accepting delivery and redelivery of aircraft and engines; and conducting ongoing lessee financial performance reviews. Its aircraft asset management services also include periodically inspecting the leased aircraft; coordinating technical modifications to aircraft to meet new lessee requirements; conducting restructuring negotiations in connection with lease defaults; repossessing aircraft and engines; arranging and monitoring insurance coverage; registering and de-registering aircraft; arranging for aircraft and engine valuations; and providing market research services. The company also provides cash management services, including treasury services, such as the financing, refinancing, hedging, and ongoing cash management of vehicles; and administrative services comprising accounting and corporate secretarial services consisting of the preparation of budgets and financial statements. In addition, it offers airframe and engine parts and supply chain solutions to airlines; maintenance, repair, and overhaul service providers; and aircraft parts distributors. As of December 31, 2021, the company had a portfolio of 2,369 owned, managed, or on order aircraft. AerCap Holdings N.V. was founded in 1995 and is headquartered in Dublin, Ireland.

How the Company Makes Money

AerCap Holdings makes money primarily through leasing aircraft to airlines and other aviation operators. The company's revenue model is centered around long-term lease agreements with airlines, under which it receives regular lease payments. These payments serve as the core revenue stream for AerCap. Additionally, the company generates income from the sale of aircraft from its fleet, as well as from providing asset management services and aircraft financing solutions. AerCap's significant partnerships with major aircraft manufacturers, such as Boeing and Airbus, allow it to maintain a modern fleet that attracts a wide range of customers. The company also benefits from economies of scale and its global presence, which enhance its ability to provide competitive leasing solutions in the aviation market.

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.

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.

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.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
8.00B	7.57B	6.91B	4.59B	4.49B
	Gross Profit
2.62B	4.34B	2.11B	1.30B	1.28B
	EBIT
2.13B	3.87B	4.52B	1.45B	2.38B
	EBITDA
4.71B	4.55B	6.91B	3.19B	4.03B
	Net Income Common Stockholders
2.10B	3.14B	-838.32M	1.00B	-297.39M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.21B	1.76B	1.60B	1.73B	1.25B
	Total Assets
71.44B	71.27B	69.73B	74.57B	42.05B
	Total Debt
45.35B	46.58B	46.67B	50.38B	28.79B
	Net Debt
44.14B	44.95B	45.07B	48.65B	27.54B
	Total Liabilities
54.26B	54.69B	53.53B	57.92B	33.12B
	Stockholders Equity
17.18B	16.59B	16.12B	16.57B	8.86B
Cash Flow		Free Cash Flow
-1.18B	-970.95M	1.30B	1.90B	946.66M
	Operating Cash Flow
5.44B	5.26B	5.17B	3.69B	2.13B
	Investing Cash Flow
-3.72B	-3.18B	-2.16B	-23.46B	-712.29M
	Financing Cash Flow
-2.13B	-2.01B	-3.16B	20.18B	-1.23B

Aercap Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 107.94
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 107.94 is above the 20-day moving average (MA) of 100.56, above the 50-day MA of 100.31, and above the 200-day MA of 96.34, indicating a bullish trend. The MACD of 2.61 indicates Negative momentum. The RSI at 65.77 is Neutral, neither overbought nor oversold. The STOCH value of 88.45 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AER.

Aercap Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AL	81 Outperform	$5.89B	8.54	9.22%	1.63%	2.81%	15.38%
AER	77 Outperform	$19.94B	9.20	12.52%	0.95%	4.77%	-25.67%
UAL	76 Outperform	$24.01B	6.70	33.57%	―	5.31%	35.95%
DAL	75 Outperform	$29.26B	8.07	27.52%	1.23%	4.91%	-27.21%
RYAAY	74 Outperform	$26.51B	15.34	21.21%	1.67%	5.39%	-15.92%
Sector *	64 Neutral	$4.25B	11.69	5.23%	249.83%	4.04%	-9.46%
LUV	59 Neutral	$17.00B	35.72	5.63%	2.41%	3.26%	27.77%