We've been asking ourselves recently if the market has placed a fair valuation on AerCap. Let's dive into some of the fundamental values of this Large-Cap Consumer Discretionary company to determine if there might be an opportunity here for value-minded investors.
AerCap Has Attractive Multiples and Potentially Undervalued:
AerCap Holdings N.V. engages in the lease, financing, sale, and management of commercial flight equipment in the United States, China, and internationally. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 20.93 and an average price to book (P/B) ratio of 2.93. In contrast, AerCap has a trailing 12 month P/E ratio of 7.5 and a P/B ratio of 1.16.
AerCap has moved 23.6% over the last year compared to 13.1% for the S&P 500 — a difference of 10.5%. AerCap has a 52 week high of $120.0 and a 52 week low of $85.57.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $4,937 | $4,494 | $5,224 | $7,014 | $7,580 | $7,997 |
| Operating Margins | 27% | -7% | 22% | -14% | 43% | 28% |
| Net Margins | 23% | -7% | 19% | -10% | 41% | 26% |
| Net Income (M) | $1,146 | -$299 | $1,001 | -$726 | $3,136 | $2,099 |
| Net Interest Expense (M) | $1,295 | $1,248 | $1,230 | $1,592 | $1,806 | $1,806 |
| Depreciation & Amort. (M) | $1,676 | $1,645 | $1,738 | $2,390 | $2,481 | $1,254 |
| Diluted Shares (M) | 136 | 128 | 149 | 240 | 228 | 194 |
| Earnings Per Share | $8.43 | -$2.34 | $6.71 | -$3.02 | $13.78 | $10.79 |
| EPS Growth | n/a | -127.76% | 386.75% | -145.01% | 556.29% | -21.7% |
| Free Cash Flow (M) | -$917 | -$331 | $1,325 | $584 | -$1,175 | $2,474 |
| CAPEX (M) | $2,502 | $1,524 | $2,369 | $4,587 | $6,437 | $2,963 |
| Total Debt (M) | $29,486 | $28,742 | $50,205 | $46,533 | $46,484 | $45,295 |
| Net Debt / EBITDA | 9.4 | 20.66 | 16.8 | 32.39 | 7.8 | 12.53 |
AerCap has rapidly growing revenues and increasing reinvestment in the business and strong operating margins with a stable trend. Additionally, the company's financial statements display generally positive cash flows and positive EPS growth. However, the firm has a highly leveraged balance sheet.
