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Strong Liquidity Boosts Air Lease (AL) Amid Rising Expenses

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We have recently updated a report on Air Lease Corporation (AL - Free Report) .

The long-term expected earnings per share (three to five years) growth rate for Air Lease is pegged at 16%. The stock has gained 12.4% in the past year compared with a 49.5% rally of the industry it belongs to.

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We are impressed by Air Lease’s endeavors to reward its shareholders. The company has an impressive dividend payment history. In November, the company’s board approved a dividend hike of approximately 15.6% to 18.5 cents per share (annually: 74 cents). This marks the company’s 9th dividend increase since February 2013, when it began distributing dividends.

At the end of the third quarter, Air Lease had a strong liquidity position of $8.4 billion, which will help the company tackle coronavirus-induced challenges. The carrier's current ratio (a measure of liquidity) at the end of the same period was 3.49, above 2.32 recorded at the end of second-quarter 2021.

Rising operating expenses pose a threat to the company's bottom line. Operating expenses increased more than 23% during 2019, thanks to higher interest expenses and selling, general and administrative expenses. The same rose 6.8% in 2020. Total expenses rose 11.9% year over year to $1.14 billion in the first nine months of 2021, primarily due to higher interest expenses and depreciation of flight equipment costs. A rise in expenses is denting the bottom line.

Zacks Rank & Stocks to Consider

Air Lease currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.

Some better-ranked stocks in the broader Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. (KNX - Free Report) , b System, Inc. (LSTR - Free Report) and C.H. Robinson Worldwide, Inc. (CHRW - Free Report) .

The long-term expected earnings per share (three to five years) growth rate for Knight-Swift is pegged at 15%. KNX is benefitting from an improvement in the adjusted operating ratio. Notably, the adjusted operating ratio improved to 82.8% in the first nine months of 2021 compared with 86.6% reported in the first nine months of 2020. In third-quarter 2021, the metric improved to 81.3% from 83.9% a year ago.  

The uptick in the adjusted operating ratios is primarily driven by an increase in revenues in the Trucking, Logistics and Intermodal segments. Notably, the lower the value of the metric, the better. KNX has surged 39% in the past year. Knight-Swift sports a Zacks Rank #1.

The long-term expected earnings per share (three to five years) growth rate for Landstar is pegged at 12%. LSTR benefits from a gradual recovery in the economy and freight market conditions in the United States.

LSTR’s top and the bottom line increased substantially in each quarter from the third quarter of 2020, owing to robust revenues in the primary segment — truck transportation. The stock has rallied 29.6% in the past year. Landstar carries a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for C.H. Robinson is pegged at 9%. CHRW is benefitting from higher pricing and volumes across most of its service lines. Total revenues jumped 42.4% year over year in the first nine months of 2021, with higher revenues across all the segments.

CHRW’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has moved up 2.5% in the past year. C.H. Robinson carries a Zacks Rank #2.