Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

AerCap Holdings N.V. (AER), Aircastle Limited (AYR): Buy These Aircraft Leasing Stocks Still Trading Below Book Value

Page 1 of 2

Even after substantial gains this year, a whole slew of financial stocks still trade below book value. As written about back in January, a good portion of airplane leasing stocks traded considerably below book value. While the fears from the financial crisis have mostly dissipated, the stocks continue to meander below book value even with strong earnings profiles.

While book values aren’t perfect, in many cases the airplanes are carried on the books at a lower valuation due to depreciation expenses. The stocks though, face fears of a rapidly rising interest rate environment. The leases on new planes can be locked in for 10 years, while the debt can be more short-term causing the interest margins to get squeezed if rates were to soar.

AerCap Holdings N.V. (NYSE:AER)

Airplane leasing firms still trading below book value

While not typically considered part of the financial sector, the airplane leasing stocks of AerCap Holdings N.V. (NYSE:AER), Aircastle Limited (NYSE:AYR), and FLY Leasing Ltd(ADR) (NYSE:FLY) continue to trade in a similar fashion to financial stocks. Back in January, the stocks traded at the low end of the valuation spectrum at levels close to 0.7 times book value. Now, even after strong market gains, the stocks still trade in the 0.8 times book value range.

As back in January, the leader in the group continues to trade at the highest multiple above book value. Air Lease Corp (NYSE:AL) now trades at 1.2 times book value, as it remains a favorite in the sector due to fast growth and a well-respected management team.

The perplexing part of the equation is that analysts expect strong earnings into the future. The sector is expected to benefit from strong growth in global airplane demand combined with airlines capital structures requiring the leasing of planes. In fact, AerCap Holdings N.V. (NYSE:AER) recently signed a $2.6 billion purchase and leaseback agreement with LATAM Airlines Group SA (ADR) (NYSE:LFL), a leading airline in South America. Profitable stocks continuously growing book value shouldn’t trade at a level below the value of the net assets of the stock.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!