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Bear Of The Day: Fly Leasing (FLY)

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Fly Leasing (FLY - Free Report) is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.  We will go over why it is the Bear in the article, but more than that I want to see if this type of stock is just the baby being thrown out with the bath water.  Just becuase things are bad now doesn't mean that they will stay that way and if you look past the current status, is this a name that could recover down the road?

Description

Fly Leasing Limited, through its subsidiaries, purchases and leases commercial aircraft under multi-year contracts to various airlines worldwide. As of December 31, 2018, it had a portfolio of 101 aircraft, including 90 narrow-body passenger aircraft and 11 wide-body passenger aircraft, as well as 7 engines. The company was founded in 2007 and is headquartered in Dun Laoghaire, Ireland.

Earnings History

I see a so-so- earnings history.  It is not good, but its not all bad either.  There were two beats and two misses in the last four quarters.  The bad news is the two most recent reports were the misses.

The good news was the there was a big beat at the end of 2019 before the pandemic really disrupted the aviation space.  That beat helped keep the average earnings surprise on the positive side over the last four quarters.

Estimates

I see some up and down movement in estiamtes.

The current quarter has seen a decrease of a penny.

The next quarter has seen an increase of two cents.

THe full year 2020 numbers are actually higher by 4 cents, which is a really good thing.

The full year 2021 numbers show a secrease of 4 cents over the last 60 days and a much bigger decrease over the last 90 days.

The Zacks Rank is focused more on the move in annual numbers and the decrease in next year and the current quarter is enough to push this stock to a Zacks Rank #5 (Strong Sell).

Valuation

If you have the ability to buy and hold a stock for a year or more, this might be a good spot to build a position.  I say that as the stock is showing a forward PE of 4x and trailing PE if 1x.  That is very, very low.  Yes, revenues dropped some 45%.... but if you believe that things go back to normal down the road then this stock could easily traded at 10x earnings and that would suggest a stock in the $20 range come next year.  That said, we don't know when the pandemic will end and beyond that when the demand to fly will increase.  All of these ideas should be given careful consideration before you make an investment decision.  I know that FLY will be on my radar going forward.

CHART

 

Fly Leasing Limited Price, Consensus and EPS Surprise

Fly Leasing Limited Price, Consensus and EPS Surprise

Fly Leasing Limited price-consensus-eps-surprise-chart | Fly Leasing Limited Quote

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