AerCap Holdings (AER): Exploring Valuation After $750 Million Share Buyback Announcement

If you are tracking AerCap Holdings (AER), you probably noticed the recent announcement that the company plans to repurchase up to $750 million of its ordinary shares by the end of next year. Share buyback programs often spark debate among investors, as they can reflect management’s confidence in future growth and improve key financial metrics by reducing share count. With this move, AerCap is sending a clear message about its outlook, even as the broader market tries to decide exactly what that means for valuation and returns.

Looking at the bigger picture, AerCap shares have delivered strong results for those who held on. Over the past year, the stock climbed 31%, showing steady momentum that stands out among peers. Year to date, shares are up more than 26%. The past month saw another 8% move higher, likely tied to optimism after the repurchase announcement. While there have been periodic setbacks, gains over three and five years have been even more impressive, suggesting that investor confidence may be on the rise.

This brings up the key question: has AerCap’s buyback unlocked a new buying opportunity, or has the market already priced in these future gains?

Most Popular Narrative: 7.4% Undervalued

The most widely followed narrative suggests that AerCap Holdings is undervalued by approximately 7.4%, based on expectations for future earnings and cash flow with a discount rate of 13.28%.

Robust, broad-based growth in global passenger and especially international air travel, led by APAC and the Middle East, continues to drive high aircraft utilization (99%) and lease extension rates (97%). This supports stable and accelerating lease revenues. Sustained supply chain constraints and OEM production delays keep aircraft and engine supply tight, pushing lease rates higher and boosting asset values. As a result, AerCap's net margins expand and asset sales generate additional gains.

Curious how analysts can see value climbing despite forecasts for weakening profit margins? The backbone of their price target comes from surprising revenue resilience, earnings recalibration, and a multiple that points to premium expectations. These core assumptions may challenge what most investors expect from a leasing giant. Ready to discover exactly what fuels their optimistic projections and why they believe the market is mispricing AerCap's future?

Result: Fair Value of $132.0 (UNDERVALUED)

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

However, the narrative could shift quickly if aircraft oversupply pressures lease rates, or if key clients face financial distress that affects revenues and margins.

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

Another View: SWS DCF Model Signals Even Deeper Value

While analyst price targets rely on earnings forecasts and current trading multiples, our DCF model offers a different lens. This approach points to AerCap as significantly undervalued, which raises further questions about whether the market fully understands the company's potential. Could this signal an even bigger disconnect ahead?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AerCap Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own AerCap Holdings Narrative

If this perspective doesn't align with your thinking or you favor hands-on research, you can easily build your own narrative in just a few minutes. 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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