I previously already estimated that around $1.60 per share to $2.15 per share could be added to the EPS by the inclusion of gains on sale. AerCap Guides For A More Bullish 2023ĭuring the second quarter, AerCap beat expectations by $0.50 per share which looks like a strong beat, but it should also be kept in mind that around $0.72 of earnings per share came from gains on sale which AerCap does not guide for. The sources-to-uses ratio contracted slightly from 1.4x from 1.3x while cost of debt increased to 3.4% compared to 3% a year ago, but that is to be expected in a high interest rate environment.
Sequentially, the excess overage increased by $1 billion driven by an increase in committed debt in the coming 12 months and lower debt maturities. AerCap's Liquidity Position Remains Strong Adjusted net income was $596 million or $2.56 per share, beating analyst estimates by $0.50 which is a strong beat and provides a 28% expansion of profits year-over-year and a 5.3% sequential increase. Therefore, looking at the adjusted net income makes a lot of sense. These are non-cash items that are required but don't really affect the underlying performance of the company.
GAAP reporting requires AerCap to amortize certain items related to the acquisition of GECAS at an accelerated pace, which significantly affects the company's income. The surge in gain on sale can be explained by the strong market for selling flight equipment which boosts the volumes as well as the value of the assets. When adding back the purchase accounting practices which do deform the reported numbers on top and bottom line but not the actual business operation, we see that year-over-year the basic lease rent increased by 6% up from a 2% decline in the previous quarter while maintenance rent increased by 19% for a 7% higher total lease rent and including gains on sale and other revenues the total top line increase was 12%. While I wasn't a big fan of the way AerCap presented it, the reality is that the company is booking gains on sales and AerCap's presentation does not quite provide a detailed discussion on how the business is performing while there actually is a comparable period for comparison now with the GECAS business included. Last quarter, the company chose to put significant emphasis on recycling value for shareholders. AerCap generally has a very informative and well-structured presentation. When analyzing companies, one of the things that I do pay attention to is the way the presentation is structured. That unwinding process does put some pressure on the stock as more shares come in circulation unless met with a repurchase for AerCap, but the underlying business keeps improving. In March, stock prices started weakening somewhat as General Electric ( GE) started capitalizing on its stake in the lessor. The stock is up over 125% more than easily outperforming the 56% return for the broader markets, supported by strong long-term demand for air travel and a recovery towards that trendline.
Since I wrote about AerCap in 2020, share prices have surged. I don't regret buying shares of the Ireland-based lessor, and if I had any regret, it is that I did not buy more. AerCap Stock: A Strong OutperformerĪerCap stock has not disappointed me one day.
#AERCAP STOCK NEWS UPDATE#
In this report, I look at the stock price performance as well as the company's most recent results, and I will provide an update to my price target for AerCap.
The stock hasn't let me or my portfolio down a single time since I added shares. Since I marked shares a buy during the pandemic, AerCap stock has shown outsized returns for shareholders, validating my buy thesis for the stock.
#AERCAP STOCK NEWS FREE#
The company is free of some of the pains that airlines face and has streamlined rental collection from long-life assets that are now more in demand than ever. ( NYSE: AER) is my favourite investment opportunity to capitalize on the recovery in air travel demand. Photofex/iStock Editorial via Getty ImagesĪerCap Holdings N.V.
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