Air Lease (AL) Down 47.6% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Air Lease (AL). Shares have lost about 47.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Air Lease due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Earnings Beat at Air Lease in Q4

Air Lease's fourth-quarter 2019 earnings of $1.42 per share surpassed the Zacks Consensus Estimate by 4 cents. However, the bottom line declined 13.9% on a year-over-year basis due to increase in operating costs. However, quarterly revenues of $548.6 million not only surpassed the Zacks Consensus Estimate of $539.2 million, but also increased 21.9% on a year-over-year basis.

This year-over-year uptick in top line can be primarily attributed to 15.4% increase in revenues from the rental of flight equipment. Notably, rental of flight equipment revenues contributed 91.9% to the top line.

Other Statistics

Revenues from aircraft sales, trading activity and other sources surged more than 100% to $44.2 million in the reported quarter. Total expenses rose 23.1% to $342.1 million due to higher interest expenses, selling, general and administrative costs as well as other factors.

During the December-end quarter, the carrier received delivery of 11 aircraft in its fleet and purchased one aircraft from the secondary market, which represented $825 million in aircraft investments. As of Dec 31, 2019, Air Lease owned 292 aircraft in the operating lease portfolio, with a net book value of $18.7 billion. Total fleet size at the end of 2019 was 858 (including owned fleet of 292) compared with 758 (including owned fleet of 275) at 2018-end.

In sync with its fleet-modernization efforts, this Los Angeles, CA-based company finalized deals to purchase an additional 102 aircraft (25 Airbus A321neo aircraft, 27 Airbus A321neo XLR and 50 Airbus A220 aircraft) with purchase option for an additional 25 Airbus A220 jets.

In 2020, the company expects to deliver 46 aircraft that represents roughly 4.1 billion in aircraft investment.

Liquidity

Air Lease exited the year with cash and cash equivalents of $317.5 million compared with $300.1 million at 2018 end. As of December end quarter, the company has $13.6 billion of debt financing, net of discount and issuance costs, compared with $11.66 billion as of Dec 31, 2018.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.