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Why Is Air Lease (AL) Up 21% Since Last Earnings Report?

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It has been about a month since the last earnings report for Air Lease (AL - Free Report) . Shares have added about 21% 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 drivers.

Air Lease's Q3 Earnings Miss Estimates

Air Lease's earnings of $1.02 per share missed the Zacks Consensus Estimate by a penny. The bottom line also declined 23.9% year over year. Results reflect the impact of coronavirus on the company’s operations.

Quarterly revenues of $493.6 million also lagged the Zacks Consensus Estimate of $500.9 million. The top line slipped 7% year over year due to an approximate 5% decrease in revenues from the rental of flight equipment. Notably, rental of flight equipment revenues contributed 94.9% to the top line.

Other Statistics

Revenues from aircraft sales, trading activity and other sources fell 33.8% to $25.16 million in the reported quarter. Total expenses inched up nearly 1% to $340.35 million due to higher interest expenses and depreciation of flight equipment costs.

As of Sep 30, 2020, Air Lease owned 308 aircraft with a net book value of $19.5 billion. Total fleet size at the end of the third quarter was 786 (including owned fleet of 308) compared with 858 (including owned fleet of 292) at 2019-end.

Liquidity

Air Lease exited the quarter with cash and cash equivalents of $1.24 billion compared with $317.49 million at 2019 end. As of Sep 30, 2020, the company had $15.18 billion of debt financing, net of discount and issuance costs compared with $13.58 billion as of Dec 31, 2019.
Air Lease has a liquidity position of $7.2 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, Air Lease has a poor Growth Score of F, a grade with the same score on the momentum front. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Air Lease has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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