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Rising Rental Revenues Aid Air Lease (AL), High Costs Ail

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We recently issued an updated report on Air Lease Corporation (AL - Free Report) .

We are impressed by Air Lease’s endeavors to reward its shareholders. In fact, the company has an impressive dividend payment history. In November 2020, its board approved a 7% hike in its quarterly cash dividend to 16 cents per share (annualized 64 cents). This raise marked the eighth dividend increase in the company’s history. The decision to hike the quarterly dividend amid the current scenario is highly commendable.  

We are also encouraged by the impressive revenues from rentals of flight equipment. Revenues from the segment rallied 17.5% in 2019 and led to a 20% increase in the company’s top line. Even in this coronavirus-ravaged scenario, the same rose 1.6% in 2020. The segment is expected to keep performing impressively in 2021 as the economy continues to recover.

At the end of the fourth quarter, the company's total cash and cash equivalents were $1.73 billion, lower than its total debt outstanding, net of discounts and issuance costs of $16.5 billion. Of the total debt load, 93% was at a fixed rate. Additionally, 98.2% of it was unsecured.  

We are also concerned about high operating expenses. Notably, operating expenses increased 6.8% in 2020 due to higher interest expenses and depreciation of flight equipment costs, which limited bottom-line growth.

Zacks Rank & Stocks to Consider

Air Lease currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Transportation sector include Kansas City Southern , Triton International Limited and Herc Holdings Inc. (HRI - Free Report) . Kansas City Southern carries a Zacks Rank #2 (Buy), while Triton and Herc Holdings sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term (three to five years) expected earnings per share growth rate for Kansas City Southern, Triton and Herc Holdings is projected at 15%, 10% and 31.2%, respectively.

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Air Lease Corporation (AL) - free report >>

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