This implies that shares are currently trading at approximately 55% of 2023 book value and approximately 8.5 times EPS. Source: Author's own calculations 2022 results are adjusted to back out the write-off of the Russian fleet. Our forecast for 2023-2025 can be found below: They also announced an 8.1% increase in their quarterly dividend to $0.20 per share, which represents the tenth increase and fortieth dividend paid by the company since inception, which implies a yield on its common stock of 2.3% at current levels. Air Lease financials and projectionsĪir Lease reported earnings of $0.90 per share in the third quarter. They have longstanding relationships with the OEMs and airlines worldwide and have grown Air Lease from a startup just over a decade ago into one of the largest global lessors. Both Hazy and Plueger left ILFC when AIG's struggles hamstrung the business in order to start Air Lease with private equity backing, bringing along other members of ILFC management to the new enterprise. The company further expanded over the next two decades under AIG's ownership. Udvar-Hazy cofounded the company that became International Lease Finance Corporation ( ILFC), building it into an industry leader and selling it to AIG in 1990. It is helmed by two industry veterans in Steven Udvar-Hazy and John Plueger, both of whom were instrumental in the creation and growth of the aircraft leasing industry itself.
#Aer stock forecast full
Due to the impact of COVID-19, among other things, there is some likelihood that leasing's share of the global fleet may continue to increase well beyond 50% as airlines opt for the full financing and flexibility that leasing provides.Īir Lease is one of the largest lessors of commercial aircraft, with a fleet of nearly 500 owned and managed commercial aircraft on lease to airlines worldwide along with 412 orders of commercial aircraft. Some of these lessors were instrumental in providing airlines with large amounts of critical financing to help weather the pandemic. The aggregate level of financing decreased during the onset of COVID-19 but is likely to ramp up again in coming years as the market normalizes and airlines and lessors take delivery of orders that were deferred during the pandemic.
There is a clear need for funding for airlines to take equipment in what is a capital-intensive business, and lessors like Air Lease are relied upon by more and more airlines each year to assist their customers in meeting their financing needs. In addition, there is a subset of transactions involving the trading of used aircraft that continues to grow as lessors compete for sale-and-leasebacks and new sources of capital enter the aircraft leasing business. Both Airbus ( OTCPK:EADSF) and Boeing ( BA) forecast the need for approximately 40,000 new aircraft over the next twenty years with a combined value of approximately $7 trillion. Company and industry overviewĬommercial aircraft leasing could be described as a growing business within the growing global aircraft fleet. The stock has a current yield of 6.8% with potential for upside once the floating rate period comes into effect. The limited duration resulting from the floating-rate feature and rising rate environment should provide solid support for shares.
Air Lease preferred stock provides an attractive income stream, and unlike many preferred stocks which are fixed-rate in nature, switches to a floating rate from March 15, 2024. The company has consistently paid dividends on all three classes of preferred stock since they were issued.
#Aer stock forecast series
We are also initiating a Buy rating on the shares of Air Lease Corporation's 6.150% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A ( NYSE: AL.PA), with a price target of $25 per share, which is equal to its Liquidation Preference. However, there are some potential challenges on the horizon that may limit the company's ability to meaningfully boost shares in the coming years. The company delivered decent third-quarter results and continues to benefit from its strong balance sheet and low cost of debt. We are recommending a Hold rating on the shares of Air Lease Corporation ( NYSE: AL) and a price target of $37 per share, approximately equal to 9 times forecast adjusted 2023 earnings per share.
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