AerCap (AER): Assessing Valuation After New GE Aerospace Engine Leasing Partnership

AerCap Holdings (NYSE:AER) has just signed a seven-year agreement with GE Aerospace to oversee lease pool management for the new GE9X engine. The agreement also extends support for several existing GE engines.

See our latest analysis for AerCap Holdings.

This new long-term partnership has come at a time when momentum around AerCap's performance is clearly building. The stock has delivered a 28.34% year-to-date share price return, while three- and five-year total shareholder returns of 148.47% and 334.54% show just how strongly the business has rewarded patient investors. Positive developments like the GE9X agreement help reinforce investor confidence in its growth potential.

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But with shares up strongly and trading just below analyst price targets, the real question now is whether AerCap remains undervalued or if future growth has already been fully factored into the current stock price.

Most Popular Narrative: 6.3% Undervalued

With AerCap’s most popular narrative assigning a fair value of $132 per share, the latest close of $123.68 leaves limited headroom based on these forward-looking projections. The current share price trails the narrative fair value, suggesting only modest upside remains if consensus assumptions are realized.

Expansion of ancillary services, particularly AerCap's spare engine leasing and new engine/MRO partnerships such as the Air France-KLM JV, diversify revenue sources and add higher-margin income streams. This positively impacts overall earnings growth. Prudent capital allocation, supported by a strong balance sheet and ongoing deleveraging, positions AerCap to capture opportunities in sale-leasebacks and organic fleet growth as OEM deliveries ramp up. This drives revenue and earnings upside while containing interest expense.

Read the complete narrative.

What’s fueling this valuation? The story centers on a shift in earnings mix and disciplined financial management. There is a bold growth map behind these numbers. Find out what moves could justify the target price.

Result: Fair Value of $132 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, a sharp uptick in aircraft deliveries or financial distress among key airline customers could challenge the optimistic outlook for AerCap’s future growth.

Find out about the key risks to this AerCap Holdings narrative.

Build Your Own AerCap Holdings Narrative

If you have your own take on AerCap's outlook or want to explore the data in detail, it's easy to build your own analysis in just a few minutes, starting here: Do it your way

A great starting point for your AerCap Holdings research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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