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Air Lease (AL) to Post Q3 Earnings: What's in the Cards?

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Air Lease Corporation (AL - Free Report) is slated to report third-quarter 2018 results on Nov 8, after market close.

In the second quarter, the company delivered mixed results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The bottom line was driven by reduced tax rate. Nevertheless, the top line improved on a year-over-year basis.

Air Lease has an impressive earnings surprise history, beating estimates in each of the trailing four quarters with an average of 21%.

Factors at Play

Air Lease is expected to perform well in the third quarter on the back of strong passenger traffic and buoyant overall economy. Rising demand for aircraft along with a shortage of delivery positions is likely to boost lease rates, which are expected to aid results the impending quarterly results.

The company is reaping benefits of the tax reform policy (Tax Cuts and Jobs Act). Reduced corporate tax rate is expected to aid bottom line growth in the third quarter.

Moreover, the company is expected to benefit in the soon-to-be- reported quarter on the back of consistent efforts to expand fleet. Air Lease stated that its fleet as of Sep 30, 2018, comprised 268 as well as 60 owned and 60 managed planes, respectively. Moreover, the company will purchase 384 new jets, scheduled for delivery through 2024. During the quarter, it delivered 7 new aircraft (1 Boeing 737 MAX 8, 2 Boeing 787-9s, 1 Airbus A320neo, 2 Airbus A321neos and 1 Airbus A350-900).

Notably, shares of the company have outperformed the industry in the July-September period. The stock has gained 9.3% compared with the industry’s rise of 5.4%.

However, the company might get affected in the to-be-reported quarter due to delivery delays, primarily due to global supply chain and production constraints.

Rising operating expenses are a threat to the company's bottom line. Such high expenses might limit bottom-line growth in the third quarter.

Air Lease Corporation Price and EPS Surprise


Air Lease Corporation Price and EPS Surprise | Air Lease Corporation Quote

Earning Whispers

Our proven model does not show that Air Lease is likely to beat estimates this quarter. This is because a stock needs to have a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below.

Zacks Rank: Air Lease carries a Zacks Rank #3.

Earnings ESP: However, Air Lease has an Earnings ESP of 0.00%. The Most Accurate Estimate as well as Zacks Consensus Estimate are pegged at $1.26. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Investors interested in the broader Transportation sector may check other companies, which have the right combination of elements to beat estimates in the next releases:

Hertz Global Holdings, Inc. (HTZ - Free Report) has an Earnings ESP of +13.48% and a Zacks Rank #2. The company will release third-quarter 2018 results on Nov 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

Frontline Ltd. (FRO - Free Report) has an Earnings ESP of +30.77% and a Zacks Rank #3.  The company is scheduled to release third-quarter 2018 results on Nov 30.

Navios Maritime Partners L.P. (NMM - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #3. The company is expected to release third-quarter 2018 results on Nov 13.

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