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Air Lease (AL) Hits 52-Week High: Will the Bull Run Continue?

Zacks Equity Research

Shares of Air Lease Corporation AL attained a 52-week high of $48.44 during the course of the trading session on Dec 24 before retracing a bit to close at $48.36. In fact, this Los Angeles, CA-based aircraft leasing company performed impressively in 2019. The stock has soared 60% compared with its industry’s 32.4% growth.

Let’s delve deeper to unearth the reasons behind this appreciative share price rally and find out whether there is room for further rally:

The company benefited from the robust increase in revenues, attributable to rentals of flight equipment in 2019. Notably, rental of flight equipment revenues accounts for bulk (96.2% of total revenues in the first nine months of 2019) of the top line at Air Lease. In fact, revenues from the segment rose 18.3% in the first nine months of 2019, leading to a 19.4% improvement in the company’s top line.

The company's efforts to expand its fleet are also encouraging. To this end, it is constantly adding planes to its fleet and removing the outdated models. Air Lease, which sold five jets during third-quarter 2019, had 307 owned aircraft in its fleet, representing a net book value of $18.9 billion, up 20% from the 2018-end figure. Total fleet size at the end of the third quarter was 737, lower than 758 (including owned fleet of 275) at the end of 2018.

We are also impressed by the company’s endeavors to add shareholder value. Its latest investor-friendly move came in November 2019 when its board approved a 15.4% hike in its quarterly cash dividend to 15 cents per share (annualized 60 cents). The current raise marks the 7th payout increase in the company’s dividend payment history.

Air Lease rewarded its shareholders with dividends for 28 consecutive quarters.  As investors prefer an income-generating stock, a high dividend-yielding one is much coveted. Needless to say that investors are always on the lookout for companies, which boast an impressive history of regular and incremental dividend payments.

Moreover, the airline industry is expected to perform better in 2020 compared with 2019, per a forecast by the International Air Transport Association (IATA). This bodes well for Air Lease as its fortunes are tied to the said industry. 

Zacks Rank & Key Picks

Air Lease currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the Zacks Transportation sector include Hawaiian Holdings HA, Ryanair Holdings RYAAY and Seaspan Corporation SSW, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for next-year earnings has been revised 7.9%, 8.8% and 15.4% upward for Hawaiian Holdings, Ryanair and Seaspan, respectively.

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