Air Lease (AL) Q4 Earnings Top On Fleet Growth, Revenues Lag

Air Lease Corporation (NYSE:AL) delivered better-than-expected earnings but lower-than-expected revenues in the fourth quarter of 2018.

The company’s earnings (excluding 41 cents from non-recurring items) of $1.65 per share surpassed the Zacks Consensus Estimate of $1.35. The bottom line also improved year over year.

Quarterly revenues of $450 million lagged the Zacks Consensus Estimate of $457.6 million. However, the metric increased 12.9% year over year, primarily owing to consistent fleet growth.

Meanwhile, rental of flight equipment revenues, accounting for bulk (97.1%) of the top line climbed 15.5% from the year-ago figure. However, aircraft sales and trading activity revenues dropped 35.5% to $12.89 million. Also, total expenses rose 19.4% to $277.95 million, thanks to higher interest expenses.

During the reported quarter, this Los Angeles, CA-based company received a delivery of 12 planes and sold five aircraft, thereby exiting the period with a fleet of 275 in its portfolio, up from 244 at the end of 2017. The average fleet net book value totaled $15.7 billion compared with $13.3 billion in December 2017. The company’s efforts to bolster its fleet are impressive. The aforementioned purchase of 12 new aircraft is anticipated to add to its earnings growth in the next quarter as well.

Air Lease Corporation Price, Consensus and EPS Surprise

Air Lease Corporation Price, Consensus and EPS Surprise | Air Lease Corporation Quote

Dividend Update

The company’s board cleared a quarterly cash dividend of 13 cents per share, payable Apr 10, 2019 to shareholders of record as of Mar 20.

Liquidity

Air Lease exited the fourth quarter with cash and cash equivalents of $300.13 million compared with $292.2 million at the end of December 2017. As of Dec 31, 2018, the company had $11.54 billion of debt financing, net of discount and issuance costs, compared with $9.7 billion as of Dec 31, 2017.

The company generated $1.25 billion of cash flow from operating activities during 2018 compared with $1.06 billion in 2017.

Zacks Rank & Other Key Picks

Air Lease carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader Transportation sector are Expeditors International of Washington, Inc. (NASDAQ:EXPD) , Azul SA (NYSE:AZUL) and SkyWest, Inc. (NASDAQ:SKYW) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Expeditors and Azul have gained more than 2% and 84%, respectively, in the past six months. Meanwhile, SkyWest boasts a stellar earnings history, having trumped the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.9%.

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