It's shaping up to be a tough period for Air Lease Corporation (NYSE:AL), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$475m, statutory earnings missed forecasts by an incredible 26%, coming in at just US$0.70 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Air Lease's eight analysts are now forecasting revenues of US$2.14b in 2021. This would be a solid 8.3% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 3.5% to US$4.07. In the lead-up to this report, the analysts had been modelling revenues of US$2.20b and earnings per share (EPS) of US$4.52 in 2021. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$55.56 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Air Lease analyst has a price target of US$60.00 per share, while the most pessimistic values it at US$52.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 11% growth on an annualised basis. That is in line with its 10% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 7.5% per year. So although Air Lease is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that Air Lease's revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$55.56, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Air Lease. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Air Lease analysts - going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Air Lease (at least 1 which can't be ignored) , and understanding these should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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