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Investors in AerCap Holdings N.V. (NYSE:AER) had a good week, as its shares rose 5.4% to close at US$50.80 following the release of its full-year results. It was a pretty bad result overall; while revenues were in line with expectations at US$4.5b, statutory losses exploded to US$2.34 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the eight analysts covering AerCap Holdings provided consensus estimates of US$4.12b revenue in 2021, which would reflect a not inconsiderable 8.2% decline on its sales over the past 12 months. Earnings are expected to improve, with AerCap Holdings forecast to report a statutory profit of US$5.30 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.26b and earnings per share (EPS) of US$5.63 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$55.44 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values AerCap Holdings at US$60.00 per share, while the most bearish prices it at US$47.00. This is a very narrow spread of estimates, implying either that AerCap Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. Over the past five years, revenues have declined around 2.1% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 8.2% decline in revenue until the end of 2021. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.1% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect AerCap Holdings to suffer worse 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on AerCap Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for AerCap Holdings going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for AerCap Holdings (1 can't be ignored!) that you need to take into consideration.
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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