The Aviation Industry’s Crystal Ball: Air Lease vs. AAR in the EPS Growth Game

Ladies and gentlemen, gather ‘round the tarot table of Wall Street, where the cards of aviation finance are being shuffled. If earnings per share (EPS) growth is your fortune-telling metric, then Air Lease Corporation (NYSE:AL) might just be whispering your name from the crystal ball. But before we crown this leasing titan as the market’s next big thing, let’s consult the financial tea leaves and compare it to another aviation player, AAR Corporation (NYSE:AIR). The skies are full of opportunities, but which one will actually deliver the golden ticket to shareholder prosperity?

The Aviation Leasing Landscape: A Market with Wings

The aviation industry, particularly aircraft leasing, is like a high-stakes poker game where the chips are multi-million-dollar planes. Companies like Air Lease and AAR are playing this game with different hands—one with a steady pair of aces, the other with a wild royal flush potential. The key to winning? Consistent EPS growth, that elusive metric that separates market darlings from financial ghosts.

Aircraft leasing is a capital-intensive business, where companies buy planes and lease them to airlines. It’s a game of supply and demand, where constrained aircraft supply and growing airline demand create a sweet spot for leasing companies. Air Lease, with its fleet of over 1,400 aircraft, is a major player in this space. Meanwhile, AAR, with its diverse aviation services, is carving out its own niche. Both companies are dancing to the same industry tune, but their financial rhythms are distinctly different.

Air Lease: The Steady Hand of Profitability

Air Lease has been putting on a financial show lately, and the audience (investors) is cheering. The company’s first quarter of 2025 results were a blockbuster, with EPS of $1.51 beating estimates by a cool 28% year-over-year. Revenue? Up 11.3% to $738.3 million. Even its Q3 2024 results were a hit, with EPS reaching $1.25. These numbers aren’t just impressive—they’re a sign of effective management and a favorable market position.

But let’s not get too starry-eyed. While Air Lease’s share price has soared over the past five years, its EPS has actually been in a bit of a decline, averaging an 8.3% drop per year. This discrepancy suggests the market might have been more focused on asset value or future potential rather than pure earnings growth. However, with a P/E ratio of 10.19x (well below the peer average of 20.34x), Air Lease might just be the market’s undervalued gem.

The company’s financials are solid, with a net margin of 15.65% and a return on equity of 8.01%. Over the past three years, Air Lease has maintained an average EPS growth rate of 11% annually—a rate that seems sustainable if the company can keep its aircraft utilization rates high and navigate economic headwinds.

AAR Corporation: The High-Risk, High-Reward Gambit

Now, let’s talk about AAR Corporation, the industry’s wild card. While Air Lease is the steady hand, AAR is the high-stakes gambler with a potential royal flush. Recent data shows AAR’s EBIT margins have improved dramatically, rising from 3.5% to 7.1%. Revenue is growing, and the company is forecast to experience substantial growth in both earnings and revenue, with projected annual increases of 75.1% and 4.7%, respectively. But the real showstopper? EPS is expected to grow by a whopping 75.8% per annum.

This rapid growth potential makes AAR an attractive option for investors seeking companies with strong EPS momentum. However, with great potential comes great risk. AAR’s transformation is still a work in progress, and its success hinges on executing its growth strategy flawlessly. If it pulls it off, investors could be in for a wild ride. If not, well, let’s just say the market’s voting machine might not be so kind.

The Investor’s Dilemma: Steady Wins the Race or Go Big or Go Home?

So, which company is the better bet for EPS growth? The answer, dear investor, depends on your risk tolerance and investment style.

If you’re the type who prefers a steady hand and a conservative risk profile, Air Lease’s consistent performance and attractive valuation metrics might be your cup of tea. The company has a solid foundation of profitability, and its undervalued stock could be a hidden treasure.

On the other hand, if you’re willing to accept greater risk in pursuit of potentially higher returns, AAR’s projected growth rates offer a compelling opportunity. The company’s rapid expansion potential is like a high-stakes poker hand—it could either win you the pot or leave you empty-handed.

The Final Prophecy: EPS Growth is the North Star

Ultimately, both Air Lease and AAR present interesting cases for investors focused on EPS growth. Air Lease demonstrates a solid foundation of profitability and a potentially undervalued stock, while AAR offers the prospect of rapid expansion. However, the key takeaway is that while market sentiment can influence short-term price movements, long-term success in the aviation industry—and indeed in any sector—is ultimately driven by a company’s ability to consistently generate earnings and deliver value to its shareholders.

So, as you gaze into the financial crystal ball, remember: the market is a voting machine in the short term, but a weighing machine in the long term. And in the end, it’s the companies that can consistently deliver on EPS growth that will soar to new heights.