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Air Lease's (AL) Shares Plunge 19% in 3 Months: Here's Why

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Shares of Air Lease Corporation (AL - Free Report) have lost 18.7% compared with the industry's 14% decline in three months. The disappointing performance was primarily caused by delivery delays from Airbus and Boeing as well as low air traffic demand stemming from the coronavirus outbreak.

Let’s take a detailed look into the factors hurting the stock.

The coronavirus outbreak has affected the company’s air traffic demand. Air Lease anticipates the sluggishness to persist in the near term.

Additionally, continuous delivery delays from Airbus and Boeing (as a result of the MAX groundings) are a concern and may hamper growth prospects going forward.

Operating expenses (due to higher interest expenses, general and administrative expenses) amounted to $342.1 million in the last reported quarter, up 23% from fourth-quarter 2018 levels. This is likely to, hurt the company’s bottom line and persist in 2020.

Notably, Air Lease's debt-to-equity ratio exceeds 100%. A high debt-to-equity ratio implies that the company is funding most of its ventures with debt. Moreover, its long term debt to capitalization ratio, a measure of a company’s financial leverage, exceeded 70% at the end of fourth-quarter 2019.

Negative Estimate Revision and Zacks Rank

The negativity revolving around the stock is evident from the Zacks Consensus Estimate being revised downward by 5.1% in the past 60 days to $5.94.

Air Lease carries a Zacks Rank #4 (Sell).

Stocks to Consider

Few better-ranked stocks in the Zacks Transportation sector are Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (VLRS - Free Report) , Frontline Ltd. (FRO - Free Report) and Costamare Inc. (CMRE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Controladora Vuela Compania de Aviacion , Frontline and Costamare have rallied 14.6%, 16.5% and 27.9%, respectively, in a year.

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