Air Lease - Snapshot Report) has been a high
flier all year, gaining more than 22% since the start of this
year. Taking a closer look at what is going on at the aviation
leasing company shows that the sky is the limit for this stock.
It is a Zacks #2 Rank (Buy) and reported earnings after the close
Air Lease Beats Estimates in Five of Last Six Quarters
AL topped the Zacks Consensus
Estimate in five of the last six quarters. The June 2012 quarter
saw the company post a beat of $0.02 or 7% ahead of the Zacks
Consensus Estimate. The following quarter saw a beat of $0.05 or
16% ahead of the Zacks Consensus Estimate. This is a prime
example of earnings momentum and is a key reason why this stock
has lifted off to recent highs.
The March 2012 quarter was the lone negative earnings surprise.
The company posted a miss of one cent or 3.4%. Following the
miss, the stock traded lower by more than 6% in the session after
Air Lease Sees Revenue Increases
In each of the last five quarters, Air Lease has seen a sequential
increase in revenue. This is the type of thing that gets
aggressive growth investors to lean forward and want to learn
more. Revenues of $92M in September 2011 were followed by $115M,
$133M, $158M and $175M in the consecutive quarters. The lack of
seasonality on this young business is something that should keep
revenues growing into the foreseeable future.
Air Lease leases commercial aircraft to airlines worldwide. The
company also provides fleet management and remarketing services,
including leasing, re-leasing, lease management and sales services
to investors and/or owners of aircraft portfolios. As of December
31, 2011, it had a fleet of 102 aircraft comprising 81 single-
aisle jet aircraft, 19 twin-aisle wide body aircraft, and 2
turboprop aircraft. The company was founded in 2010 and is based
in Los Angeles, California.
Air Lease Sees Estimates Moving Higher
Estimates for Air Lease have been rising of late. The Zacks
Consensus Estimate for 2012 for Air Lease stood at $1.19 as of
October 2012. The consensus since moved higher to $1.25. Over
the same time period estimates for 2013 have moved from $1.68 to
$1.71. The implied earnings growth rate of more than 36.8% is
just what aggressive growth investors are seeking.
The valuation picture here is a little mixed, but I like it. I see
Trailing PE multiple of 22x as being well ahead of the industry
average of 14x - not great, but that is the past. The forward PE
(and much more important multiple) is 15.3x, just below the 15.8x
industry average. Price to Book of 1.1x is comfortably below the
2.4x industry average, so good room to grow there, but don't
expect that metric to move much due to the nature of the business.
The price to sales multiple of 4.5x is well ahead of the 1.9x
industry average, but again, as a transaction business that is
growing I am fine with paying up a little on that metric.
A quick look at the chart shows a stock that has been zooming
higher. One of the primary drivers for this stock has been the
earnings momentum of increasing absolute and percentage earnings
surprises. Consistent revenue growth also contributes to a story
that only looks like it will get better over time. Air Lease is a
Zacks #2 Rank (Buy).
Brian Bolan is a Stock Strategist
Zacks.com. He is the Editor in charge of the Zacks Home Run Investor
service, a Buy and Hold service where he recommends the
in the portfolio
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