It has been about a month since the last earnings report for Air Lease (AL - Free Report) . Shares have added about 13.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Air Lease due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Air Lease's Q2 Earnings Surpass Estimates
Air Lease's earnings of $1.26 per share surpassed the Zacks Consensus Estimate of $1.02. Also, the bottom line increased 14.5% on a year-over-year basis. Also, quarterly revenues of $521.3 million beat the Zacks Consensus Estimate of $499.4 million and increased 10.6% on a year-over-year basis.
This year-over-year uptick can be primarily attributed to 7.3% increase in revenues from the rental of flight equipment. Notably, rental of flight equipment revenues contributed 95.5% to the top line.
Revenues from aircraft sales, trading activity and other sources surged more than 100% to $23.5 million in the reported quarter. Total expenses rose 8.5% to $337.4 million due to higher interest expenses, depreciation of flight equipment costs as well as other factors.
As of Jun 30, Air Lease owned 301 aircraft in the operating lease portfolio, with a net book value of $19.1 billion. Total fleet size at the end of first quarter was 800 (including owned fleet of 301) compared with 858 (including owned fleet of 292) at 2019-end.
Thanks to the COVID-19 outbreak, the company reduced capital expenditures in aircraft investments and is expecting to minimize aircraft sales for the rest of 2020. In order to counter the COVID-19 impact in the financial market, Air Lease has an impressive liquid position of $6.9 billion.
Air Lease exited the quarter with cash and cash equivalents of $926.4 million compared with $317.4 million at 2019 end. As of June end, the company had $14.6 billion of debt financing, net of discount and issuance costs compared with $13.6 billion as of Dec 31, 2019.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
At this time, Air Lease has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Air Lease has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.