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Air Lease Corporation: Should Value Investors Pick AL Stock?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Air Lease Corporation (AL - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Air Lease has a trailing twelve months PE ratio of 9.58, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.89. If we focus on the long-term PE trend, Air Lease’s current PE level puts it significantly below its midpoint of 15.95, as well as the highs scaled over the past five years, indicating that it could be a solid entry point.
Further, the stock’s PE also compares favorably with the Zacks classified Transportaion sector’s trailing twelve months PE ratio, which stands at 16.09. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Air Lease has a forward PE ratio (price relative to this year’s earnings) of 10.67, so it fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Air Lease has a P/S ratio of about 2.95. This is a bit lower than the S&P 500 average, which comes in at 3.08 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, AL is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Air Lease currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Air Lease a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Air Lease is just 0.91, a level that is much lower than the industry average of 1.34. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, AL is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Air Lease might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and Momentum score of ‘D’, each. This gives AL a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been quite disappointing. The current quarter has seen three estimates go lower in the past sixty days compared to one upward revision, while the full year estimate has seen six downward and one upward revision in the same time period.
This has had a negative impact on the consensus estimate, as the current quarter consensus estimate has dropped 3.3% in the past two months, while the full year estimate has decreased 3.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Air Lease is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #3, the stock belongs to an industry which is ranked among the Top 40%, which indicates that broader factors are favorable for the company. Further, over the past one year, the Zacks classified Transportation – Equipment & Leasing industry’s performance has outdone the broader market, as you can see below:
So, value investors might want to wait for estimates to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
Image: Bigstock
Air Lease Corporation: Should Value Investors Pick AL Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/al_20170523%20(1).jpg)
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Air Lease Corporation (AL - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Air Lease has a trailing twelve months PE ratio of 9.58, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.89. If we focus on the long-term PE trend, Air Lease’s current PE level puts it significantly below its midpoint of 15.95, as well as the highs scaled over the past five years, indicating that it could be a solid entry point.
Further, the stock’s PE also compares favorably with the Zacks classified Transportaion sector’s trailing twelve months PE ratio, which stands at 16.09. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Air Lease has a forward PE ratio (price relative to this year’s earnings) of 10.67, so it fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Air Lease has a P/S ratio of about 2.95. This is a bit lower than the S&P 500 average, which comes in at 3.08 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, AL is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Air Lease currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Air Lease a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Air Lease is just 0.91, a level that is much lower than the industry average of 1.34. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, AL is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Air Lease might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘D’ and Momentum score of ‘D’, each. This gives AL a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been quite disappointing. The current quarter has seen three estimates go lower in the past sixty days compared to one upward revision, while the full year estimate has seen six downward and one upward revision in the same time period.
This has had a negative impact on the consensus estimate, as the current quarter consensus estimate has dropped 3.3% in the past two months, while the full year estimate has decreased 3.8%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Air Lease Corporation Price and Consensus
Air Lease Corporation Price and Consensus | Air Lease Corporation Quote
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/al_20170523%20(5).jpg)
Bottom Line
Air Lease is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Despite having a Zacks Rank #3, the stock belongs to an industry which is ranked among the Top 40%, which indicates that broader factors are favorable for the company. Further, over the past one year, the Zacks classified Transportation – Equipment & Leasing industry’s performance has outdone the broader market, as you can see below:
So, value investors might want to wait for estimates to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>