AerCap Holdings Still At A Double-Digit Discount To Fair Value

The last year or so has seen aircraft leasing company AerCap (NYSE:AER) finally get some of its due. While the Street seemingly ignored the value that management has created by selling older planes above book value, buying back stock below book value, and maintaining a high-quality, virtually fully-leased fleet, the last year has at least seen the shares outperform the S&P 500.

I liked AerCap back in the fall of 2016 and I still like it now. I do expect lower net spreads, net income, and share buybacks over the next two years, but I expect AerCap to continue growing earnings at a long-term rate around 4% and to maintain a double-digit ROE. With aircraft productivity likely plateauing and ongoing growth in passenger traffic, AerCap should have ample opportunities to grow its fleet while maintaining attractive utilization and spreads.

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AerCap Holdings Still At A Double-Digit Discount To Fair Value