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Aircraft leasing company Air Lease Corporation (NYSE:AL) fell short of analysts' expectations in Q2 CY2024, with revenue flat year on year at $667.3 million. It made a non-GAAP profit of $1.23 per share, improving from its profit of $1.10 per share in the same quarter last year.
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Air Lease (AL) Q2 CY2024 Highlights:
- Revenue: $667.3 million vs analyst estimates of $685 million (2.6% miss)
- EPS (non-GAAP): $1.23 vs analyst estimates of $1.08 (13.5% beat)
- Free Cash Flow was -$413.5 million compared to -$459.4 million in the previous quarter
- owned aircraft: 474, up 26 year on year
- Market Capitalization: $5.53 billion
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Sales GrowthA company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one tends to grow for years. Over the last five years, Air Lease grew its sales at a decent 8% compounded annual growth rate. This shows it was successful in expanding, a useful starting point for our analysis.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Air Lease's annualized revenue growth of 9% over the last two years is above its five-year trend, suggesting its demand recently accelerated.
This quarter, Air Lease missed Wall Street's estimates and reported a rather uninspiring 0.8% year-on-year revenue decline, generating $667.3 million of revenue. We also like to judge companies based on their projected revenue growth, but not enough Wall Street analysts cover the company for it to have reliable consensus estimates.
Operating Margin Air Lease has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 46.1%. This result isn't surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Air Lease's annual operating margin decreased by 3 percentage points over the last five years. Even though its margin is still high, shareholders will want to see Air Lease become more profitable in the future.
EPSWe track the long-term growth in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth was profitable.
Air Lease's flat EPS over the last five years was below its 8% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
Diving into the nuances of Air Lease's earnings can give us a better understanding of its performance. As we mentioned earlier, Air Lease's operating margin declined by 3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don't tell us as much about a company's fundamentals.
Like with revenue, we also analyze EPS over a shorter period to see if we are missing a change in the business. For Air Lease, its two-year annual EPS growth of 154% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.
In Q2, Air Lease reported EPS at $1.23, up from $1.10 in the same quarter last year. This print easily cleared analysts' estimates, and shareholders should be content with the results. We also like to analyze expected EPS growth based on Wall Street analysts' consensus projections, but there is insufficient data.
Key Takeaways from Air Lease's Q2 ResultsWe enjoyed seeing Air Lease exceed analysts' EPS expectations this quarter. On the other hand, its revenue unfortunately missed. Overall, this was a bad quarter for Air Lease. The stock remained flat at $47.40 immediately after reporting.
