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Bull of the Day

Air Lease (AL - Snapshot Report) - 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 on 2/28/13.

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 the release.

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.

Company Description

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.

Valuation

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.

The Chart

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).

Air Lease - ticker AL>
 
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Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio

Brian is also the editor of Follow The Money Trader a trading service that tracks institutional money flows and looks for great stock picks from that data.

Follow Brian Bolan on twitter at @BBolan1

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