AerCap Holdings N.V. (NYSE: AER)

Sector: Industrials Industry: Rental & Leasing Services CIK: 0001378789
Market Cap 26.27 Bn
P/B 1.43
P/E 7.00
P/S 3.08
ROIC (Qtr) 8.71
Div Yield % 0.53
Rev 1y % (Qtr) 8.30
Total Debt (Qtr) 43.57 Bn
Debt/Equity (Qtr) 2.38
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About

AerCap Holdings N.V., commonly known as AerCap, is a prominent player in the aviation leasing industry, with a portfolio of 3,452 aircraft, engines, and helicopters as of December 31, 2023. The company operates in every major geographical region, providing a diverse range of assets for lease. AerCap's primary business activities encompass aircraft leasing, engine leasing, and helicopter leasing. The company's aircraft leasing business is the most significant segment of its operations, with a portfolio of 1,556 owned aircraft, 184 managed aircraft,...

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Investment thesis

Bull case

  • Operating cash flow of 5.39B provides exceptional 2696562x coverage of minority interest expenses 2000, showing strong core operations.
  • Operating cash flow of 5.39B provides strong 32.44x coverage of stock compensation 166.24M, indicating sustainable incentive practices.
  • Strong operating cash flow of 5.39B provides 9.88x coverage of SG&A expenses 545.93M, showing efficient operational cost management.
  • Cash position of 1.48B provides exceptional 739872x coverage of minority interest expenses 2000, indicating strong liquidity.
  • Retained earnings of 16.32B provide strong 138.56x coverage of intangibles 117.79M, indicating quality earnings retention.

Bear case

  • Operating cash flow of 5.39B barely covers its investment activities of (1.66B), with a coverage ratio of -3.24, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 5.39B provides thin coverage of dividend payments of (192.44M) with a -28.03 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 6.29B show weak coverage of depreciation charges of 2.65B, with a 2.38 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 2.19B represents just -1.23x of debt issuance (1.79B), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High depreciation of 2.65B relative to operating cash flow of 5.39B, which is 0.49x suggests significant maintenance capital requirements affecting free cash flow.

Debt Instrument Breakdown of Revenue (2019)

Debt Instrument Breakdown of Revenue (2019)

Peer comparison

Companies in the Rental & Leasing Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 URI United Rentals, Inc. 55.62 Bn 22.30 3.45 15.35 Bn
2 FTAI FTAI Aviation Ltd. 27.80 Bn -179.72 106.00 3.45 Bn
3 AER AerCap Holdings N.V. 26.27 Bn 7.00 3.08 43.57 Bn
4 UHAL U-Haul Holding Co /NV/ 13.75 Bn 106.91 2.29 8.06 Bn
5 GATX Gatx Corp 9.00 Bn 53.16 6.81 9.03 Bn
6 R Ryder System Inc 8.88 Bn 17.80 0.70 7.65 Bn
7 AL Air Lease Corp 7.23 Bn 6.92 2.40 19.73 Bn
8 HRI Herc Holdings Inc 5.00 Bn 5,004.00 1.14 9.68 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.95 1.32
EV to Cash from Ops. EV/CFO 12.68 77.20
EV to Debt EV to Debt 1.57 3.45
EV to EBIT EV/EBIT 10.88 -105.66
EV to EBITDA EV/EBITDA 7.85 20.85
EV to Free Cash Flow [EV/FCF] EV/FCF 31.22 -1.38
EV to Market Cap EV to Market Cap 2.60 3.10
EV to Revenue EV/Rev 8.03 9.87
Price to Book Value [P/B] P/B 1.43 7.72
Price to Earnings [P/E] P/E 7.00 277.95
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 19.49 3.00
Dividend Payout Ratio % Div Payout % (Qtr) 3.70 500.03
Dividend per Basic Share Div per Share (Qtr) 0.81 1.19
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 6.37 6.22
Interest Coverage Int. cover (Qtr) 3.17 -60.94
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 18.74 17.05
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 5.58 54.66
Dividend Growth (1y) % Div 1y % (Qtr) 8.00 0.10
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 43.25 38.63
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 27.34 5.40
EBIT Growth (1y) % EBIT 1y % (Qtr) 42.48 2.84
EBT Growth (1y) % EBT 1y % (Qtr) 77.76 42.60
EPS Growth (1y) % EPS 1y % (Qtr) 96.93 243.85
FCF Growth (1y) % FCF 1y % (Qtr) 46.49 5.41
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 9.50 31.59
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.12 0.54
Cash Payout Ratio Cash Payout (Qtr) 0.02 0.03
Cash Ratio Cash Ratio 0.00 0.21
Current Ratio Current Ratio 0.00 1.01
Debt to Equity Ratio Debt/Equity (Qtr) 2.38 20.57
Interest Cover Ratio Int Coverage (Qtr) 3.17 -60.94
Times Interest Earned Times Interest Earned (Qtr) 3.17 -60.94
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 104.90 35.32
EBIT Margin % EBIT Margin % (Qtr) 73.83 12.98
EBT Margin % EBT Margin % (Qtr) 50.56 3.50
Gross Margin % Gross Margin % (Qtr) 92.40 42.91
Net Profit Margin % Net Margin % (Qtr) 44.00 1.24