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Aercap Holdings (AER)
NYSE:AER
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Aercap Holdings
(NYSE:AER)
72Outperform
Positive Factors
Revenue Performance
AER reported total revenues of $1.95bn, above consensus of $1.92bn by 1.4% and above MSe of $1.85bn by 5.2%.
Stock Buyback Strategy
AerCap announced a new $1bn share repurchase program, which, if fully utilized, would have a ~7% accretive impact on EPS.
Negative Factors
Adjusted Net Income
Adjusted net income for the quarter was $463mn vs. consensus of $489mn.
Credit Loss Provision
The earnings miss was driven by a $140mm credit loss provision related to Azul exposure.
Aercap Holdings (AER) vs. S&P 500 (SPY)
Market Cap
$17.18B
Dividend Yield1.11%
Average Volume (3M)1.99M
Price to Earnings (P/E)8.3
Beta (1Y)0.93
Revenue Growth5.53%
EPS Growth-22.48%
CountryUS
Employees698
SectorIndustrials
Sector Strength70
IndustryRental & Leasing Services
Share Statistics
EPS (TTM)11.11
Shares Outstanding186,783,220
10 Day Avg. Volume2,688,244
30 Day Avg. Volume1,987,791
Financial Highlights & Ratios
PEG Ratio0.45
Price to Book (P/B)N/A
Price to Sales (P/S)2.73
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$115.83Price Target Upside25.93% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
Aercap Holdings Business Overview & Revenue Model
Company DescriptionAerCap Holdings N.V. engages in the lease, financing, sale, and management of commercial flight equipment in China, Hong Kong, Macau, the United States, Ireland, and internationally. The company offers aircraft asset management services, such as remarketing aircraft and engines; collecting rental and maintenance rent payments, monitoring aircraft maintenance, monitoring and enforcing contract compliance, and accepting delivery and redelivery of aircraft and engines; and conducting ongoing lessee financial performance reviews. Its aircraft asset management services also include periodically inspecting the leased aircraft; coordinating technical modifications to aircraft to meet new lessee requirements; conducting restructuring negotiations in connection with lease defaults; repossessing aircraft and engines; arranging and monitoring insurance coverage; registering and de-registering aircraft; arranging for aircraft and engine valuations; and providing market research services. The company also provides cash management services, including treasury services, such as the financing, refinancing, hedging, and ongoing cash management of vehicles; and administrative services comprising accounting and corporate secretarial services consisting of the preparation of budgets and financial statements. In addition, it offers airframe and engine parts and supply chain solutions to airlines; maintenance, repair, and overhaul service providers; and aircraft parts distributors. As of December 31, 2021, the company had a portfolio of 2,369 owned, managed, or on order aircraft. AerCap Holdings N.V. was founded in 1995 and is headquartered in Dublin, Ireland.
How the Company Makes MoneyAerCap Holdings makes money primarily through leasing aircraft to airlines and other aviation operators. The company's revenue model is centered around long-term lease agreements with airlines, under which it receives regular lease payments. These payments serve as the core revenue stream for AerCap. Additionally, the company generates income from the sale of aircraft from its fleet, as well as from providing asset management services and aircraft financing solutions. AerCap's significant partnerships with major aircraft manufacturers, such as Boeing and Airbus, allow it to maintain a modern fleet that attracts a wide range of customers. The company also benefits from economies of scale and its global presence, which enhance its ability to provide competitive leasing solutions in the aviation market.
Aercap Holdings Financial Statement Overview
Summary
Aercap Holdings demonstrates strong revenue growth and net income recovery, reflecting resilience. However, high leverage and negative free cash flow present risks to financial stability.Income Statement
Aercap Holdings has demonstrated solid revenue growth over the years, with a notable increase from $4.49B in 2020 to $7.99B in 2024. The gross profit margin has remained strong, although the net profit margin fluctuated due to a net income loss in 2022. The company has shown resilience with a significant recovery in net income to $2.10B in 2024, indicating improved operational efficiency. However, the EBIT margin is currently unavailable for 2024, suggesting potential concerns over operational profitability.75
Positive
Balance Sheet
The balance sheet of Aercap Holdings shows a relatively high debt-to-equity ratio, primarily due to significant total debt levels of $45.35B in 2024, compared to stockholders' equity of $17.18B. This indicates high leverage, which can pose risks if not managed properly. The equity ratio has improved slightly over the years, suggesting a modest increase in financial stability. Return on equity has been volatile, reflecting fluctuations in net income.65
Positive
Cash Flow
Aercap Holdings has faced challenges in generating positive free cash flow, with a decline from positive $1.29B in 2022 to negative $1.18B in 2024. Operating cash flow has remained relatively stable, but the high capital expenditures have impacted free cash flow negatively. The operating cash flow to net income ratio indicates some stability, but the free cash flow to net income ratio needs improvement for better financial health.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.00B | 7.57B | 6.91B | 4.59B | 4.49B | Gross Profit |
| 2.62B | 4.34B | 2.11B | 1.30B | 1.28B | EBIT |
| 0.00 | 3.87B | 4.52B | 1.45B | 2.38B | EBITDA |
| 4.71B | 4.55B | 6.91B | 3.19B | 4.03B | Net Income Common Stockholders |
| 2.10B | 3.14B | -838.32M | 1.00B | -297.39M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.21B | 1.76B | 1.60B | 1.73B | 1.25B | Total Assets |
| 71.44B | 71.27B | 69.73B | 74.57B | 42.05B | Total Debt |
| 45.35B | 46.58B | 46.67B | 50.38B | 28.79B | Net Debt |
| 44.14B | 44.95B | 45.07B | 48.65B | 27.54B | Total Liabilities |
| 54.26B | 54.69B | 53.53B | 57.92B | 33.12B | Stockholders Equity |
| 17.18B | 16.59B | 16.12B | 16.57B | 8.86B |
| Cash Flow | Free Cash Flow | |||
| -1.18B | -970.95M | 1.30B | 1.90B | 946.66M | Operating Cash Flow |
| 5.44B | 5.26B | 5.17B | 3.69B | 2.13B | Investing Cash Flow |
| -3.72B | -3.18B | -2.16B | -23.46B | -712.29M | Financing Cash Flow |
| -2.13B | -2.01B | -3.16B | 20.18B | -1.23B |
Aercap Holdings Technical Analysis
Negative
91.98
Price Trends
99.34
Negative
97.53
Negative
95.64
Negative
Market Momentum
0.86
Positive
53.52
Neutral
35.60
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AER, the sentiment is Negative. The current price of 91.98 is below the 20-day moving average (MA) of 99.21, below the 50-day MA of 99.34, and below the 200-day MA of 95.64, indicating a bearish trend. The MACD of 0.86 indicates Positive momentum. The RSI at 53.52 is Neutral, neither overbought nor oversold. The STOCH value of 35.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AER.
Aercap Holdings Risk Analysis
Aercap Holdings disclosed 43 risk factors in its most recent earnings report. Aercap Holdings reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Aercap Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $21.50B | 6.96 | 28.63% | ― | 6.23% | 20.08% | |
73 Outperform | $22.74B | 13.45 | 21.21% | 1.90% | 5.39% | -15.92% | |
72 Outperform | $4.60B | 12.38 | 5.82% | 2.09% | 2.65% | -35.24% | |
72 Outperform | $17.18B | 8.32 | 12.43% | 1.11% | 5.53% | -22.48% | |
71 Outperform | $26.69B | 7.25 | 27.52% | 1.34% | 4.91% | -27.21% | |
64 Neutral | $15.03B | 34.72 | 4.50% | 2.75% | 5.34% | -6.20% | |
62 Neutral | $7.62B | 13.01 | 3.19% | 3.32% | 3.77% | -14.28% |
* Industrials Sector Average
Performance Comparison
AER
Aercap Holdings
91.98
10.37
12.71%
AL
Air Lease
41.16
-6.18
-13.05%
DAL
Delta Air Lines
40.88
-5.27
-11.42%
RYAAY
Ryanair Holdings
44.15
-10.00
-18.47%
LUV
Southwest Airlines
26.19
-1.00
-3.68%
UAL
United Airlines Holdings
65.60
24.56
59.84%
Aercap Holdings Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -9.13% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
AerCap Holdings N.V. reported a strong financial performance in 2024, with record earnings, significant cash flow, and a substantial share repurchase program, reflecting a positive outlook for 2025. However, challenges such as purchase accounting adjustments, ongoing Ukraine conflict recoveries, and elevated leasing expenses present areas of concern.Highlights
Record-Breaking Financial Performance
AerCap Holdings N.V. reported GAAP net income of $2.1 billion and earnings per share (EPS) of $10.79 for the full year 2024. Adjusted net income was $2.3 billion with an adjusted EPS of $12.01.
Strong Operating Cash Flow and Share Repurchase Program
Generated $5.4 billion in operating cash flow and announced a new $1 billion share repurchase program, with a total of $5 billion authorized in the last two years.
Significant Gain on Sale
Achieved a record gain on sale of $260 million in Q4, with a gain on sale margin of 43%, and a full year gain on sale of $651 million.
High Cash Liquidity and Credit Rating
Maintained a strong liquidity position with $21 billion in total sources of liquidity and a leverage ratio of 2.35 to 1, with a credit rating of BBB+.
Increased Shareholder Returns
Returned over $4 billion to shareholders in the past two years, with a significant reduction in share count by 25%.
2025 Outlook and Confidence
AerCap holds $45 billion in contracted future lease cash flows, with a projected EPS range of $8.50 to $9.50 for 2025, reflecting strong future performance expectations.
Lowlights
Impact of Purchase Accounting Adjustments
Fourth quarter GAAP net income was affected by $112 million in purchase accounting adjustments, impacting EPS by $0.60.
Ukraine Conflict Recoveries
Fourth quarter included $168 million of recoveries related to the Ukraine conflict, with total recoveries still significantly lower than the $3.2 billion book value of affected assets.
Higher Leasing Expenses
Leasing expenses were elevated in the fourth quarter, with expectations to remain at similar levels in 2025 due to timing of events.
Potential Challenges with Asset Supplies
OEM delays and engine reliability challenges are expected to continue into 2025, affecting the supply of new aircraft.
Company Guidance
During AerCap Holdings N.V.'s fourth quarter 2024 earnings call, the company reported strong financial results, highlighted by a GAAP net income of $2.1 billion and earnings per share (EPS) of $10.79. Adjusted net income was $2.3 billion, with an adjusted EPS of $12.01. For 2025, AerCap projects an adjusted EPS range of $8.50 to $9.50, not factoring in gains from asset sales. The company anticipates sustained demand in aircraft leasing, citing $45 billion in contracted future lease cash flows and a robust sales environment that led to $651 million in gains on sale in 2024. A new $1 billion share repurchase authorization was announced, bringing the total buyback commitment to $5 billion over the last two years. The company maintains a strong liquidity position with $21 billion in total sources, and a leverage ratio of 2.35 times, while planning to leverage its financial flexibility to continue returning capital to shareholders and investing in organic growth opportunities.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.