Stock Analysis

If You Had Bought AerCap Holdings' (NYSE:AER) Shares A Year Ago You Would Be Down 33%

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NYSE:AER
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It is doubtless a positive to see that the AerCap Holdings N.V. (NYSE:AER) share price has gained some 49% in the last three months. But that is minimal compensation for the share price under-performance over the last year. After all, the share price is down 33% in the last year, significantly under-performing the market.

Check out our latest analysis for AerCap Holdings

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

AerCap Holdings fell to a loss making position during the year. Some investors no doubt dumped the stock as a result. However, there may be an opportunity for investors if the company can recover.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

earnings-per-share-growth
NYSE:AER Earnings Per Share Growth December 15th 2020

Dive deeper into AerCap Holdings' key metrics by checking this interactive graph of AerCap Holdings's earnings, revenue and cash flow.

A Different Perspective

AerCap Holdings shareholders are down 33% for the year, but the market itself is up 22%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.01% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for AerCap Holdings (of which 1 can't be ignored!) you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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