Aircraft Leasing Stocks Can Appreciate Further: Air Lease Corp (AL), Fly Leasing Ltd (ADR) (FLY), Aircastle Limited (AYR)

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This company leases airplanes

These companies share renewable energy companies’ proclivity for names that get right to the heart of the matter. Air Lease Corp (NYSE:AL) leases aircrafts too, go figure. It’s a far larger player than Fly with a market cap of almost $3 billion, versus Fly’s $300 million range. The company also trades above book so it can’t be called as good of a value play as Fly Leasing Ltd (ADR) (NYSE:FLY). It is, however, expanding its fleet. The last earnings call discussed their order book and both its size and diversity. They’re adding a lot of new planes to their fleet. Their debt-to-equity is comparatively low at 1.8, giving them some flexibility with regard to expansion.

They’re also committed to stability by locking in long-term deals. This obviously limits the company’s ability to respond to increases in prices for the market, but it’s safer than having planes sitting around doing nothing. The planes need to be flying. However, I’m not sure this really differentiates the company from its peers. The company is also issuing its first cash dividend, but this is very small at $0.025. The yield is the lowest of the bunch listed here. All the expansion should increase income in the future. The company doubled its revenue in 2012, compared to 2011, and I think it aims to grow revenue instead of returning cash to shareholders.

Aircastle Limited (NYSE:AYR)

Aircastle Limited (NYSE:AYR) rounds out the bunch with a market cap of around $1 billion, putting it right between the other two. It has a dividend yield close to 5% and has over $700 million in cash. That makes it the cash king of this group, though this increase is due to raising $1.6 billion in unsecured debt. Its debt-to-equity is at 2.5. It’s likely that cash and debt will be used to expand their fleet. The book value per share is $20.30, far above the current price.

The 2012 earnings call reported that, compared to 2011, Aircastle Limited (NYSE:AYR) only had a 9% increase in top line revenue, far less than the other two companies listed here, and the reason Aircastle Limited (NYSE:AYR) isn’t in the top spot. They did highlight something important, though – passenger travel grew 5.3% in 2012, which is in line with historical growth rates. Air cargo shrank by 1.5%, but is extremely sensitive to the economic cycle. The company’s situation is improving, but things are still weak. Real gains are yet to come as the global economy improves. I wish there was some kernel of amazing information that would make me sound brilliant, but there isn’t. These companies will benefit as the economy gets going, and there’s no magical factor that’s going to make one of these companies king of the stock market.

The article Aircraft Leasing Stocks Can Appreciate Further originally appeared on and is written by Nihar Patel.

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