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Are Investors Undervaluing AerCap (AER) Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is AerCap (AER). AER is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 6.82. This compares to its industry's average Forward P/E of 7.84. Over the past year, AER's Forward P/E has been as high as 8.57 and as low as 5.58, with a median of 7.26.

Another notable valuation metric for AER is its P/B ratio of 0.86. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 0.93. Over the past year, AER's P/B has been as high as 0.98 and as low as 0.61, with a median of 0.84.

Finally, our model also underscores that AER has a P/CF ratio of 2.61. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 2.83. Over the past 52 weeks, AER's P/CF has been as high as 3.23 and as low as 2.05, with a median of 2.63.

These figures are just a handful of the metrics value investors tend to look at, but they help show that AerCap is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AER feels like a great value stock at the moment.


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