Back to top

Image: Shutterstock

Here's Why Investors Should Retain Air Lease (AL) Stock Now

Read MoreHide Full Article

Air Lease Corporation (AL - Free Report) stock has moved up 34.3% in the past year compared with the 66.7% growth of the industry it belongs to.

Zacks Investment ResearchImage Source: Zacks Investment Research

For 2022, earnings and revenues are expected to grow at a rate of 56.2% and 27.7% on a year-over-year basis, respectively.  

Key Growth Drivers

Air Lease’s endeavors to reward its shareholders are impressive. The company has an impressive dividend payment history. In November 2020, its board approved a 7% hike in its quarterly cash dividend to 16 cents per share (annualized 64 cents). This raise marked the 8th dividend increase in the company’s history. The decision to hike the quarterly dividend, amid  the current scenario, is highly commendable. As investors prefer an income-generating stock, a high dividend-yielding option is much coveted. Needless to say, investors are always on the lookout for companies that boast an impressive history of regular and incremental dividend payments.

Moreover, the company’s liquidity position is impressive. At the end of the second quarter, Air Lease’s current ratio (a measure of liquidity) was 2.32, well above 1.05 recorded at the end of first-quarter 2021.  A higher current ratio is more desirable as it indicates that the company is more capable of paying its short-term debt obligations.

Primary Concern

Rising operating expenses are a threat to the company's bottom line. Operating expenses increased more than 23% during 2019, thanks to higher interest expenses as well as selling, general and administrative expenses. The same rose 6.8% in 2020. Continuing the trend, total expenses rose 10.6% to $748.61 million in the June quarter due to higher interest expenses and depreciation of flight equipment costs. This, in turn, is hurting the bottom line. The same is expected to have hurt the company’s third-quarter results (coming out on Nov 4) as well.

Zacks Rank & Stocks to Consider

Air Lease currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Transportation sector are Schneider National, Inc. (SNDR - Free Report) , Landstar System, Inc. (LSTR - Free Report) and TFI International Inc. (TFII - Free Report) . All the stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Schneider National, Landstar System and TFI International is pegged at 17.9%, 12% and 31.6%, respectively.