AerCap Holdings N.V.’s (NYSE:AER) latest earnings update in December 2018 revealed that the company endured a minor headwind with earnings declining from US$1.1b to US$1.0b, a change of -5.6%. Today I want to provide a brief commentary on how market analysts perceive AerCap Holdings’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ prospects for the upcoming year seems pessimistic, with earnings reducing by -7.5%. Over the medium term, earnings should continue to be below today’s level, with a reduction of -2.5% in 2021, eventually reaching US$990m in 2022.
Even though it is informative understanding the rate of growth each year relative to today’s figure, it may be more valuable to gauge the rate at which the earnings are moving every year, on average. The pro of this technique is that we can get a better picture of the direction of AerCap Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 0.8%. This means, we can assume AerCap Holdings will grow its earnings by 0.8% every year for the next few years.
For AerCap Holdings, there are three key aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Future Earnings: How does AER’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AER? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.