Investing in stocks comes with the risk that the share price will fall. And there's no doubt that AerCap Holdings N.V. (NYSE:AER) stock has had a really bad year. To wit the share price is down 50% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 43% lower than three years ago). Shareholders have had an even rougher run lately, with the share price down 18% in the last 90 days.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the unfortunate twelve months during which the AerCap Holdings share price fell, it actually saw its earnings per share (EPS) improve by 12%. It could be that the share price was previously over-hyped.
It's surprising to see the share price fall so much, despite the improved EPS. So it's easy to justify a look at some other metrics.
Revenue was fairly steady year on year, which isn't usually such a bad thing. However, it is certainly possible the market was expecting an uptick in revenue, and that the share price fall reflects that disappointment.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We know that AerCap Holdings has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for AerCap Holdings in this interactive graph of future profit estimates.
A Different Perspective
Investors in AerCap Holdings had a tough year, with a total loss of 50%, against a market gain of about 17%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6.0% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand AerCap Holdings better, we need to consider many other factors. For example, we've discovered 3 warning signs for AerCap Holdings (2 make us uncomfortable!) that you should be aware of before investing here.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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