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Category: Stock Market and Aircastle
Date: 15 February 2020 Stock Price: $32.19 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Aircastle a company that acquires,leases and sells commercial jet aircraft. The group currently manages 287 aircrafts leased to 85 customers in 49 countries.
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About Aircastle
Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world. As of December 31, 2019, Aircastle owned and managed on behalf of its joint ventures 287 aircraft leased to 85 customers located in 49 countries
Overview of Aircastle's 4th quarter 2019 earnings report
The numbers we are interested in (for the quarter):
- Total revenue: $247.730 million (down from $292.556 million from the same quarter of the previous year)
- Revenues decreased by -15.3% over the last 12 months
- Total operating expenses: $181.482 million (up from $170.009 million for the same quarter of the previous year)
- Total operating expenses increased by 6.74% over the last 12 months
- Net income: $47.318 million (down from $103.837 million for the same quarter of the previous year)
- Diluted earnings per share: $0.62 (down from $1.35 for the same quarter of the previous year)
- PE ratio of Aircastle: 15.6
- Dividend declared: $0.32
- Dividend yield of Aircastle: 3.98%
- Diluted weighted-average shares outstanding: 75.525 million (down from 76.281 million for the same quarter of the previous year)
- Cash and cash equivalents: $140.882 million
- Cash and cash equivalents per share: $1.86
- Cash and cash equivalents makes up 5.8% of Aircastle's market capital
- Cash and cash equivalents makes up 1.71% of Aircastle's total assets
- Flight equipment held for lease: $7.375 billion
- Flight equipment held for lease makes up 89.9% of Aircastle's total assets
- Shareholders equity in Aircastle: $2.052 billion
- Shareholders equity per Aircastle share: $27.16
- Aircastle is trading at 1.18 times its shareholders equity which is outside the expected range of between 2 and 4 times that most firms tend to trade at
- Cash generated from operations for the full fiscal year: $536.418 million
- Cash generated from operations per share for the full fiscal year: $7.10
Aircastle management commentary on their 4th quarter 2019 earnings
Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported fourth quarter 2019 net income of $47.3 million, or $0.62 per diluted common share, and adjusted net income of $66.0 million, or $0.87 per diluted common share. Net income for the year ended December 31, 2019 was $156.6 million, or $2.06 per diluted common share, and adjusted net income was $196.5 million, or $2.59 per diluted common share. The fourth quarter results included total revenues of $243.7 million versus $292.6 million in the prior year. For the full year, total revenues were $917.9 million versus $890.4 million in 2018, an increase of 3.1%.
- Previously announced acquisition of Aircastle by affiliates of Marubeni Corporation and Mizuho Leasing Company, Limited is on track to close in the first half
- Acquired sixteen narrow-body aircraft during the fourth quarter for $283.6 million and 49 aircraft in 2019 for $1.3 billion
- Committed to acquire seven additional narrow-body aircraft in 2020 for $165.0 million
- Sold eight aircraft during the fourth quarter and twenty aircraft for the full year; full year gain on sale of $45.5 million represents 12.6% of net proceeds; 2019 sales included two wide-body aircraft
- Placed eleven Embraer E195-E2 aircraft with KLM Declared our 55th consecutive quarterly dividend
- Returned $109.7 million of capital to shareholders during 2019; $91.3 million in dividends paid and $18.4 million of shares repurchased
Commenting on the results, Mike Inglese, Aircastle's Chief Executive Officer, stated, "Our professional placement capability and fleet of high-quality, in-demand aircraft enabled Aircastle to deliver strong financial results in a shifting market environment throughout 2019. During the fourth quarter, we continued to execute our strategy focused on acquiring narrow-body aircraft. We closed a total of 49 aircraft during the full year 2019 for $1.3 billion. The fourth quarter also saw fleet utilization average 99.2%, a return to the level that we have consistently achieved throughout our history, following the placement of aircraft that were previously on lease with Avianca Brazil and Jet Airways. I am also pleased to report that we've made progress on our E2 program. During the fourth quarter, we placed eleven additional E-Jets, for a total of fourteen placements out of the twenty-five E2s ordered." Mr. Inglese concluded,
"With the pending acquisition of Aircastle by affiliates of Marubeni and Mizuho Leasing, we are very optimistic about Aircastle's future. We expect this strong, high-quality sponsorship, and our disciplined investment approach, will enable our company to continue to grow profitably, increase sustainable cash flow and generate attractive, long-term returns. Both now and following the anticipated acquisition, we will remain consistently focused on the responsible stewardship of investor capital for the benefit of our owners and Aircastle's fixed income investors."
"With the pending acquisition of Aircastle by affiliates of Marubeni and Mizuho Leasing, we are very optimistic about Aircastle's future. We expect this strong, high-quality sponsorship, and our disciplined investment approach, will enable our company to continue to grow profitably, increase sustainable cash flow and generate attractive, long-term returns. Both now and following the anticipated acquisition, we will remain consistently focused on the responsible stewardship of investor capital for the benefit of our owners and Aircastle's fixed income investors."
Aircastle (NYSE: AYR) stock price history
The image below shows the stock price history of Aircastle (NYSE:AYR) for the last 5 years. And its been a good time for Aircastle stockholders. 5 years ago the stock was trading around $23.30 and its currently trading at $32.19. Thats a decent return of 38.15% return provided to Aircastle stockholders over the last 5 years.
The stock of Aircastle is currently trading at a lot closer to its 52 week high of $32.47 than it is to its 52 week low of $18.63 which to us is a clear indication that the short term sentiment and momentum of Aircastle stock ispositive at this point in time.
The stock of Aircastle is currently trading at a lot closer to its 52 week high of $32.47 than it is to its 52 week low of $18.63 which to us is a clear indication that the short term sentiment and momentum of Aircastle stock ispositive at this point in time.
Recent coverage of Aircastle (NYSE: AYR)
The extract below shows recent coverage of Aircastle as obtained from Stamfordadvocate.com
STAMFORD — Aircraft-leasing firm Aircastle reported Thursday lower quarterly returns and confirmed that the planned sale of the company was on track. In the fourth quarter, Aircastle’s revenues totaled about $244 million, down 17 percent year over year. The decline reflected a nearly $73 million drop in maintenance revenues, which arose from terminating the leases of 11 aircraft with the bankrupt Avianca Brazil.
As a result of the decreased revenues, quarterly profits plunged by more than 50 percent, to about $47 million. “Our professional placement capability and fleet of high-quality, in-demand aircraft enabled Aircastle to deliver strong financial results in a shifting market environment throughout 2019,” Aircastle CEO Michael Inglese said in a statement. “During the fourth quarter, we continued to execute our strategy focused on acquiring narrow-body aircraft.” After the release of the quarterly numbers, Aircastle shares closed Thursday at $32.22, flat compared with their final price on Wednesday.
Read the full article here
STAMFORD — Aircraft-leasing firm Aircastle reported Thursday lower quarterly returns and confirmed that the planned sale of the company was on track. In the fourth quarter, Aircastle’s revenues totaled about $244 million, down 17 percent year over year. The decline reflected a nearly $73 million drop in maintenance revenues, which arose from terminating the leases of 11 aircraft with the bankrupt Avianca Brazil.
As a result of the decreased revenues, quarterly profits plunged by more than 50 percent, to about $47 million. “Our professional placement capability and fleet of high-quality, in-demand aircraft enabled Aircastle to deliver strong financial results in a shifting market environment throughout 2019,” Aircastle CEO Michael Inglese said in a statement. “During the fourth quarter, we continued to execute our strategy focused on acquiring narrow-body aircraft.” After the release of the quarterly numbers, Aircastle shares closed Thursday at $32.22, flat compared with their final price on Wednesday.
Read the full article here
Aircastle (NYSE: AYR) latest stock valuation
So based on the 4th quarter 2019 earnings report of Aircastle (NYSE:AYR) what do we value Aircastle stock at? Based on the earnings reporte our valuation model provides a target price (full value price) for Aircastle at $32.90 a stock.
We therefore feel that the stock of Aircastle is close to being is overvalued
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $32.90 A good entry point into the stock of Aircastle would therefore be at $29.60 or below. We expect the stock of Aircastle to trade in a narrow range around our target price in coming weeks and months.
We therefore feel that the stock of Aircastle is close to being is overvalued
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $32.90 A good entry point into the stock of Aircastle would therefore be at $29.60 or below. We expect the stock of Aircastle to trade in a narrow range around our target price in coming weeks and months.
Next earnings release of Aircastle
It is expected that Aircastle will release their 1st quarter 2020 earnings report in middle May 2020