Air Lease Corporation (NYSE: AL) and Aircastle Limited (NYSE:AYR) are both transportation companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitabiliy.

Risk and Volatility

Air Lease Corporation has a beta of 1.77, indicating that its share price is 77% more volatile than the S&P 500. Comparatively, Aircastle Limited has a beta of 1.8, indicating that its share price is 80% more volatile than the S&P 500.

Institutional & Insider Ownership

92.1% of Air Lease Corporation shares are owned by institutional investors. Comparatively, 63.4% of Aircastle Limited shares are owned by institutional investors. 9.8% of Air Lease Corporation shares are owned by insiders. Comparatively, 2.7% of Aircastle Limited shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Air Lease Corporation and Aircastle Limited’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Air Lease Corporation $1.44 billion 2.81 $347.66 million $3.37 11.63
Aircastle Limited $788.43 million 2.17 $157.43 million $2.00 10.85

Air Lease Corporation has higher revenue and earnings than Aircastle Limited. Aircastle Limited is trading at a lower price-to-earnings ratio than Air Lease Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Air Lease Corporation and Aircastle Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Air Lease Corporation 25.56% 11.02% 2.65%
Aircastle Limited 19.81% 8.88% 2.21%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Air Lease Corporation and Aircastle Limited, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Air Lease Corporation 0 1 6 0 2.86
Aircastle Limited 1 7 1 0 2.00

Air Lease Corporation currently has a consensus price target of $45.00, suggesting a potential upside of 14.83%. Aircastle Limited has a consensus price target of $24.22, suggesting a potential upside of 11.62%. Given Air Lease Corporation’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Air Lease Corporation is more favorable than Aircastle Limited.

Dividends

Air Lease Corporation pays an annual dividend of $0.30 per share and has a dividend yield of 0.8%. Aircastle Limited pays an annual dividend of $1.04 per share and has a dividend yield of 4.8%. Air Lease Corporation pays out 8.9% of its earnings in the form of a dividend. Aircastle Limited pays out 52.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Air Lease Corporation has raised its dividend for 6 consecutive years and Aircastle Limited has raised its dividend for 3 consecutive years.

Summary

Air Lease Corporation beats Aircastle Limited on 15 of the 17 factors compared between the two stocks.

About Air Lease Corporation

Air Lease Corporation is an aircraft leasing company. The Company is principally engaged in purchasing new commercial jet transport aircraft directly from aircraft manufacturers, such as The Boeing Company (Boeing) and Airbus S.A.S. (Airbus), and leasing those aircraft to airlines across the world. Along with its leasing activities, the Company sells aircraft from its operating lease portfolio to third parties, including other leasing companies, financial services companies and airlines. The Company also provides fleet management services to investors and owners of aircraft portfolios for a management fee. The Company provides aircraft to airline customers in various markets, such as Asia, the Pacific Rim, Latin America, the Middle East, Europe, Africa and North America. As of December 31, 2016, the Company had 237 owned aircraft and 30 aircraft in its managed fleet portfolio.

About Aircastle Limited

Aircastle Limited is a holding company. The Company, through its subsidiaries, acquires, leases and sells commercial jet aircrafts to airlines. The Company is engaged in financing and managing commercial flight equipment. The Company manages its aircrafts in the United States, Ireland and Singapore. As of December 31, 2016, the Company owned and managed on behalf of its joint ventures 206 aircrafts leased to 71 lessees located in 36 countries. The Company originates acquisitions and sales through relationships with airlines, other aircraft lessors, financial institutions and brokers, as well as other sources. As of February 7, 2017, the Company had lease commitments or letters of intent to lease or sell 16 aircrafts. The Company’s aircraft portfolio includes passenger wide-body, passenger narrow-body and freighter aircrafts. The Company’s portfolio spans across various regions, such as the Middle East and Africa, South America, North America, Asia and Pacific, and Europe.

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