On Friday, TD Cowen adjusted its price target on shares of Air Lease Corp (NYSE:AL), reducing it to $56.00 from the previous $58.00, while retaining a Buy rating on the stock. The adjustment follows the company's recent earnings report, which revealed a diluted earnings per share (EPS) of $0.81. This figure fell short of both TD Cowen's estimate of $0.92 and the First Call consensus of $0.93.
The shortfall in Air Lease's EPS was attributed to several factors. A decline in lease revenue had a negative impact of $0.17 on the EPS. Additionally, an increase in interest expenses contributed a $0.06 negative effect. These downward pressures were somewhat mitigated by a decrease in depreciation expense, which had a positive impact of $0.06, and an increase in aircraft sales revenue adding $0.05 to the EPS.
Air Lease's performance in the recent quarter indicates a mixed financial picture, with some areas of the business outperforming and others underperforming expectations. The company's lease revenue and interest expenses have played significant roles in the latest EPS figures.
The maintained Buy rating by TD Cowen suggests a continued positive outlook for Air Lease's stock despite the recent adjustments. The new price target of $56.00 reflects a recalibration of expectations based on the company's latest financial results.
In other recent news, Air Lease Corporation reported a busy second quarter of 2024, with substantial activity in new aircraft deliveries, sales, and financing. The company invested approximately $940 million in 13 new aircraft, while selling 11 aircraft to third-party buyers for around $530 million. Furthermore, Air Lease issued $600 million of 5.30% senior unsecured medium-term notes due in 2026, and an additional $600 million of 5.20% senior unsecured medium-term notes due in 2031.
In the first quarter of 2024, Air Lease reported revenues of $663 million and diluted earnings per share of $0.87. Despite a minor shortfall in revenue, BMO Capital and TD Cowen maintained a positive outlook on the company. BMO Capital adjusted its price target for Air Lease to $55.00 while TD Cowen reduced its target to $56.
Recent developments indicate that Air Lease's near-term estimates were decreased by 5% due to lower lease revenues. However, the company saw increased gains in sales volume and margins. Analysts from BMO Capital noted an industry trend of lease contract rates being approximately 14-15% higher than those signed two years ago. TD Cowen noted robust demand for Air Lease's aircraft, with the company expecting around $5.1 billion in aircraft deliveries throughout 2024.
InvestingPro Insights
As Air Lease Corporation (NYSE:AL) navigates through its financial ebbs and flows, real-time data from InvestingPro offers a detailed snapshot of the company's current market position. With a market capitalization of $4.45 billion and a P/E ratio standing at a modest 8.51, the company presents an interesting case for investors seeking value. The P/E ratio adjusted for the last twelve months as of Q1 2024 is slightly higher at 10.55, which still underscores a potentially attractive valuation when paired with the company's impressive gross profit margin of nearly 60%.
InvestingPro Tips spotlight that Air Lease operates with a significant debt burden, which is a critical factor to consider. However, the company has demonstrated a commitment to returning value to shareholders, having increased its dividend for 11 consecutive years. This consistent dividend growth, including a 5% increase in the last twelve months as of Q1 2024, may appeal to income-focused investors.
For those interested in exploring further, InvestingPro provides additional insights, including 12 more InvestingPro Tips for Air Lease Corporation, which can be found at: https://www.investing.com/pro/AL. These tips could offer deeper analysis for investors considering Air Lease as part of their portfolio.
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