Air Lease Corporation (AL - Free Report) currently benefits from strong liquidity, among other factors. However, rising operating expenses and a decline in collection rates are a oncern.
Air Lease Corporation’s (AL - Free Report) first-quarter 2022 earnings (excluding $5.57 from non-recurring items) of $1.36 per share surpassed the Zacks Consensus Estimate of $1.04. The bottom line surged 94.3% year over year despite increased costs. Quarterly revenues of $596.7 million outperformed the Zacks Consensus Estimate of $565.2 million. The top line increased 25.7% year over year, owing to a 21% increase in revenues from the rental of flight equipment, which contributed 94.9% to the top line.
How is Air Lease Faring?
Strong freight and cargo markets are supporting demand for the company’s wide-body passenger aircraft. Continued recovery in airline operations is further driving lease demand. Higher lease demand and rising interest rates and inflation indicate a rising lease rate environment, which bodes well for Air Lease.
The sequential improvement in Air Lease’s cash and cash equivalents is encouraging. The company’s cash and cash equivalents improved to $1.49 billion at the end of the first quarter of 2022 compared with $1.09 billion at the 2021-end. Its current ratio at the end of the first quarter was 2.78, implying that the company can pay its short-term obligations.
Steady growth in the fleet is driving Air Lease’s top line (up 3.6% year over year in 2021). Total revenues jumped 25.7% year over year in the first quarter of 2022. The company purchased 53 new aircraft in 2021 with investments totaling $3.6 billion. During the first quarter, the company took delivery of a total of nine aircraft, representing approximately $490 million in aircraft investments.
However, rising operating expenses threaten the company's bottom line. Total expenses climbed 13% year over year to $1.55 billion in 2021, primarily due to higher interest expenses and depreciation of flight equipment costs. Total operating expenses jumped more than 100% year over year in the first quarter of 2022, primarily due to the write-off of the Russian fleet.
A decline in the company’s collection rate (total cash collected from lease rentals and maintenance reserves) in the first quarter is a little concerning. The collection rate was 96.9% for the March quarter of 2022 compared with 99.3% in the December quarter of 2021. With coronavirus concerns persisting, the company’s collection metric might remain under pressure.
Zacks Rank & Key Picks
Air Lease currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Transportation sector are Ryder System, Inc. (R - Free Report) , C.H. Robinson Worldwide, Inc. (CHRW - Free Report) and GATX Corporation (GATX - Free Report) .
Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings surpassing the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States.
Revenues in all the segments rose (on higher rental revenues, new business and favorable pricing) in first-quarter 2022. R currently carries a Zacks Rank #2 (Buy).
The expected long-term (three-to-five years) earnings per share (EPS) growth rate for C.H. Robinson is pegged at 9%. Improving freight market conditions are aiding CHRW.
In first-quarter 2022, the top line improved 41.8%, owing to favorable truckload pricing for customers and handsome profits in ocean freight. CHRW currently carries a Zacks Rank of 2.
GATX has a trailing-four quarter surprise of 40.1%, on average, with its earnings surpassing the Zacks Consensus Estimate in all the last four quarters. The gradual improvement in the North American railcar leasing market is a huge positive for GATX.
Driven by the upsides, the stock has risen 0.9% in the past year. GATX currently has a Zacks Rank of 2.
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Air Lease Corporation (AL - Free Report) currently benefits from strong liquidity, among other factors. However, rising operating expenses and a decline in collection rates are a oncern.
Air Lease Corporation’s (AL - Free Report) first-quarter 2022 earnings (excluding $5.57 from non-recurring items) of $1.36 per share surpassed the Zacks Consensus Estimate of $1.04. The bottom line surged 94.3% year over year despite increased costs. Quarterly revenues of $596.7 million outperformed the Zacks Consensus Estimate of $565.2 million. The top line increased 25.7% year over year, owing to a 21% increase in revenues from the rental of flight equipment, which contributed 94.9% to the top line.
How is Air Lease Faring?
Strong freight and cargo markets are supporting demand for the company’s wide-body passenger aircraft. Continued recovery in airline operations is further driving lease demand. Higher lease demand and rising interest rates and inflation indicate a rising lease rate environment, which bodes well for Air Lease.
The sequential improvement in Air Lease’s cash and cash equivalents is encouraging. The company’s cash and cash equivalents improved to $1.49 billion at the end of the first quarter of 2022 compared with $1.09 billion at the 2021-end. Its current ratio at the end of the first quarter was 2.78, implying that the company can pay its short-term obligations.
Steady growth in the fleet is driving Air Lease’s top line (up 3.6% year over year in 2021). Total revenues jumped 25.7% year over year in the first quarter of 2022. The company purchased 53 new aircraft in 2021 with investments totaling $3.6 billion. During the first quarter, the company took delivery of a total of nine aircraft, representing approximately $490 million in aircraft investments.
However, rising operating expenses threaten the company's bottom line. Total expenses climbed 13% year over year to $1.55 billion in 2021, primarily due to higher interest expenses and depreciation of flight equipment costs. Total operating expenses jumped more than 100% year over year in the first quarter of 2022, primarily due to the write-off of the Russian fleet.
A decline in the company’s collection rate (total cash collected from lease rentals and maintenance reserves) in the first quarter is a little concerning. The collection rate was 96.9% for the March quarter of 2022 compared with 99.3% in the December quarter of 2021. With coronavirus concerns persisting, the company’s collection metric might remain under pressure.
Zacks Rank & Key Picks
Air Lease currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Transportation sector are Ryder System, Inc. (R - Free Report) , C.H. Robinson Worldwide, Inc. (CHRW - Free Report) and GATX Corporation (GATX - Free Report) .
Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings surpassing the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States.
Revenues in all the segments rose (on higher rental revenues, new business and favorable pricing) in first-quarter 2022. R currently carries a Zacks Rank #2 (Buy).
The expected long-term (three-to-five years) earnings per share (EPS) growth rate for C.H. Robinson is pegged at 9%. Improving freight market conditions are aiding CHRW.
In first-quarter 2022, the top line improved 41.8%, owing to favorable truckload pricing for customers and handsome profits in ocean freight. CHRW currently carries a Zacks Rank of 2.
GATX has a trailing-four quarter surprise of 40.1%, on average, with its earnings surpassing the Zacks Consensus Estimate in all the last four quarters. The gradual improvement in the North American railcar leasing market is a huge positive for GATX.
Driven by the upsides, the stock has risen 0.9% in the past year. GATX currently has a Zacks Rank of 2.
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