AerCap Holdings Has One Big Advantage At This Time

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Discount Fountain
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Summary

  • AerCap Holdings (AER) has continued to see growth.
  • On a price/earnings basis, I see this stock continuing to appreciate.
  • AerCap Holdings has one distinct advantage relative to its competitors at this point in time.

It’s been a while since I've covered AerCap Holdings (NYSE:AER). In my previous article on the stock, I predicted that more growth would eventually materialise – the stock was trading at $35 back in August 2016.

Since then, we have seen the stock rise to $52.24 at the time of this writing:

Source: investing.com

Moreover, the stock still looks to be trading at good value since we have seen earnings per share continue to rise, while the price/earnings ratio continues to remain near a five-year low:

I had previously been highly optimistic on AerCap Holdings’ prospects given the growing trend by airline companies to lease rather than buy aircraft to conduct their operations. With AerCap Holdings having a foothold in the narrow-body segment in particular, the company has seen significant growth through catering to this market.

That said, there is one big advantage that AerCap Holdings has over many of its rivals at this point in time: it does not have the Airbus (OTCPK:EADSY) A380 as part of its portfolio.

With concerns mounting that the Airbus A380 program is growing too old for its time, the industry is seeking smaller jets for more frequent operations. That is, airline companies would prefer the flexibility of having their passengers being able to catch a transcontinental flight at several time periods during the day, rather than having one large aircraft transport a large number of passengers at less frequent time intervals.

In this regard, AerCap Holdings is in a very good position. When we look at the fleet breakdown of this company, we see that a large part of its portfolio is comprised of smaller, narrow-body jets:

Source: AerCap Holdings – Our Aircraft

Meanwhile, Amedeo, an Irish-based aircraft leasing company, has eight A380s as part of its portfolio, and has had to create its

This article was written by

Discount Fountain profile picture
4.27K Followers
I am an independent investor with an interest in analyzing stocks across the consumer, finance, telecommunication, and travel sectors. As a data scientist, I also have a great interest in using data tools to better understand a company's financial position.Some examples include:- Aggregating quarterly churn and ARPU data for Deutsche Telekom (DTEGY) and analysing trends over time using SQL: https://seekingalpha.com/article/4516805-deutsche-telekom-growth-potential-remains- Building a Monte Carlo simulation in Python to analyze loss ratios for Zurich Insurance Group (ZURVY): https://seekingalpha.com/article/4459821-zurich-insurance-stock-solid-insurance-company-still-faces-risks- Examining ADR and RevPAR trends by brand for Hilton Worldwide Holdings (HLT) using SQL: https://seekingalpha.com/article/4517248-hilton-worldwide-holdings-an-analysis-of-adr-and-revpar-trendsDisclaimer: All of the author's articles are written on an "as is" basis and without warranty. They represent the author's opinion only and in no way constitute professional investment advice. It is the responsibility of the reader to conduct their due diligence and seek investment advice from a licensed professional before making any investment decisions. The author disclaims all liability for any actions taken based on the information contained in any articles published.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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