In December 2018, Air Lease Corporation (NYSE:AL) released its earnings update. Generally, analyst consensus outlook appear cautiously optimistic, as a 23% increase in profits is expected in the upcoming year, though this is relatively lower than the previous 5-year average earnings growth of 29%. Presently, with latest-twelve-month earnings at US$511m, we should see this growing to US$629m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How is Air Lease going to perform in the near future?
The view from 9 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 18% based on the most recent earnings level of US$511m to the final forecast of US$938m by 2022. This leads to an EPS of $8.29 in the final year of projections relative to the current EPS of $4.88. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 30% to 30% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Air Lease, there are three essential factors 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 Air Lease’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 Air Lease? 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.