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Is Air Lease Corporation a Good Value Pick at the Moment?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Air Lease Corporation (AL - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Air Lease has a trailing twelve months PE ratio of 8.36, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.86. If we focus on the long-term PE trend, Air Lease’s current PE level is way below its midpoint over the past five years (which stands at 16.40).
As we can see, the stock’s PE has consistently fallen over the last two years. The reason behind this trend is that while Air Lease’s earnings have risen impressively in that time period, the price has not appreciated enough to reflect the same. This indicates that the company remains a strong value proposition. This relationship can be seen in the chart below:
Further, the stock’s PE also compares favorably with the Zacks classified Transportation-Equipment and Leasing industry’s trailing twelve months PE ratio, which stands at 12.50. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Air Lease has a forward PE ratio (price relative to this year’s earnings) of 9.64, so it is fair to expect an increase in the company’s share price in the near future.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Air Lease’s PEG ratio stands at just 1.11, compared with the Zacks Transportation-Equipment and Leasing industry average of 1.44. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Air Lease currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look.
Clearly, Air Lease is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Air Lease might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘B’. This gives AL a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to one upward revision, while the full year estimate has seen four upward revisions in the same time period.
This has had a mixed impact on the consensus estimate as well, as the current quarter consensus estimate has declined 1.9% in the past one month, while the full year estimate has gone up by 0.3% over the same time frame.
You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Air Lease is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom9% out of more than 250 industries) and a Zacks Rank #3 (Hold), it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Transportation-Equipment and Leasing industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Is Air Lease Corporation a Good Value Pick at the Moment?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Air Lease Corporation (AL - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Air Lease has a trailing twelve months PE ratio of 8.36, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.86. If we focus on the long-term PE trend, Air Lease’s current PE level is way below its midpoint over the past five years (which stands at 16.40).
As we can see, the stock’s PE has consistently fallen over the last two years. The reason behind this trend is that while Air Lease’s earnings have risen impressively in that time period, the price has not appreciated enough to reflect the same. This indicates that the company remains a strong value proposition. This relationship can be seen in the chart below:
Further, the stock’s PE also compares favorably with the Zacks classified Transportation-Equipment and Leasing industry’s trailing twelve months PE ratio, which stands at 12.50. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Air Lease has a forward PE ratio (price relative to this year’s earnings) of 9.64, so it is fair to expect an increase in the company’s share price in the near future.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
Air Lease’s PEG ratio stands at just 1.11, compared with the Zacks Transportation-Equipment and Leasing industry average of 1.44. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Air Lease currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look.
Clearly, Air Lease is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Air Lease might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and a Momentum score of ‘B’. This gives AL a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to one upward revision, while the full year estimate has seen four upward revisions in the same time period.
This has had a mixed impact on the consensus estimate as well, as the current quarter consensus estimate has declined 1.9% in the past one month, while the full year estimate has gone up by 0.3% over the same time frame.
You can see the consensus estimate trend and recent price action for the stock in the chart below:
Air Lease Corporation Price and Consensus
Air Lease Corporation Price and Consensus | Air Lease Corporation Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Air Lease is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom9% out of more than 250 industries) and a Zacks Rank #3 (Hold), it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Transportation-Equipment and Leasing industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>