Steady AerCap Continues To Offer Value

Aircraft leasing company AerCap Holdings (NYSE:AER) has done relatively well this year, with the shares slightly ahead of the S&P 500 on a year-to-date basis and slightly behind on a trailing 12-month comparison. The company has also continued to outperform its peers, with the shares outperforming Air Lease (NYSE:AL), Fly Leasing (NYSE:FLY) and Aircastle (NYSE:AYR) over the past year. Air traffic growth remains healthy on a global basis, oil prices are not yet at problematic levels for airlines, and rate increases give investment grade-rated AerCap an ongoing opportunity to take advantage of its better access to capital.

I continue to believe AerCap shares are undervalued, though the environment over the next couple of quarters may not be as conducive to outperformance. A shift away from significant asset sales is going to weigh on reported earnings, and a shift back toward portfolio growth is going to redirect capital away from share buybacks for a time. Even with that turbulence, though, I believe these shares are undervalued below the low-to-mid $60s.

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Steady AerCap Continues To Offer Value