Aercap Holdings (AER) AI Stock Analysis

• Market Cap: $21.84B
• Dividend Yield: 0.86%
• Average Volume (3M): 1.57M
• Price to Earnings (P/E): 7.5
• Beta (1Y): 0.84
• Revenue Growth: 3.24%
• EPS Growth: 4.46%
• Country: US
• Employees: 698
• Sector: Industrials
• Sector Strength: 76
• Industry: Rental & Leasing Services
• EPS (TTM): 2.83
• Shares Outstanding: 176,566,560
• 10 Day Avg. Volume: 1,915,477
• 30 Day Avg. Volume: 1,572,927
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 2.93
• Enterprise Value/Revenue: 8.03
• Enterprise Value/Gross Profit: 20.60
• Enterprise Value/Ebitda: 12.24
• 1Y Price Target: $130.78
• Price Target Upside: 6.39% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 79 Outperform
• Price Target: $131.00 ▲(6.56% Upside)

AerCap's strong financial performance, technical indicators, and positive earnings call sentiment contribute to a high overall score. The company's undervaluation and robust demand for its assets further enhance its attractiveness. However, high leverage and negative free cash flow due to capital investments pose risks that need careful management.

Positive Factors

Earnings Performance

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

Lease Rates

High lease rates and elevated extensions are tailwinds for lease revenue, with most aircraft already re-leased, extended, or sold.

Stock Buyback

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

Negative Factors

Capital Deployment

Existing $3.5 billion of excess capital will be deployed through buybacks, aircraft sale-leasebacks, and investments in the engine business, which may limit flexibility in uncertain market conditions.

Gain on Sale

Gain on sale was $57mm in Q2, down from $177mm last quarter and $129mm in the same quarter last year.

Profit Margins

The P/E multiple for AER has moved higher by a half-turn, which could indicate increased valuation concerns.

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 generates revenue primarily through leasing commercial aircraft to airlines and cargo operators on long-term contracts, which provide a steady stream of rental income. The company also earns money from the sale of aircraft and engines, as well as through management fees from its aircraft management services. Additional revenue streams include financing arrangements and sales of aviation-related services. Aercap benefits from its extensive portfolio of aircraft, which includes a diverse range of commercial jets and cargo aircraft, and maintains significant partnerships with aircraft manufacturers and airlines, enhancing its market position and revenue generation capabilities.

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	7.98B	8.00B	7.58B	7.01B	4.59B	4.49B
Gross Profit	3.11B	4.61B	4.34B	2.21B	1.30B	2.52B
EBITDA	5.23B	4.15B	3.91B	4.20B	2.72B	3.93B
Net Income	2.14B	2.10B	3.14B	-726.04M	1.00B	-298.57M
Balance Sheet
Total Assets	72.56B	71.44B	71.27B	69.73B	74.57B	42.05B
Cash, Cash Equivalents and Short-Term Investments	1.06B	1.21B	1.63B	1.60B	1.73B	1.25B
Total Debt	46.24B	45.35B	46.58B	46.67B	50.55B	28.84B
Total Liabilities	55.36B	54.26B	54.69B	53.53B	57.92B	33.12B
Stockholders Equity	17.19B	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

• Technical Analysis Sentiment: Positive
• Last Price: 122.93
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• 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 122.93 is above the 20-day moving average (MA) of 113.64, above the 50-day MA of 113.84, and above the 200-day MA of 103.83, indicating a bullish trend. The MACD of 2.55 indicates Negative momentum. The RSI at 75.42 is Negative, neither overbought nor oversold. The STOCH value of 97.15 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
MGRC	81 Outperform	$3.05B	12.06	23.85%	1.54%	8.78%	117.40%
AL	80 Outperform	$6.76B	7.28	12.59%	1.44%	8.08%	76.55%
AER	79 Outperform	$21.84B	7.49	16.87%	0.86%	3.24%	4.46%
WLFC	73 Outperform	$1.04B	9.04	19.97%	0.66%	30.08%	32.62%
FTAI	68 Neutral	$15.30B	36.91	389.50%	0.80%	55.05%	―
Sector *	64 Neutral	$10.95B	16.37	8.81%	1.96%	2.68%	-15.33%
HRI	61 Neutral	$4.27B	148.92	1.41%	2.09%	11.41%	-92.67%