AerCap and Genesis Finalize Merger; Create Earnings Powerhouse
Stone Fox Capital submits:
Finally, the merger between AerCap Holdings (AER) and Genesis Lease (GLS) will be finalized today, creating the largest independent airplane leasing company. It also creates an earnings powerhouse. For 2010, they expect to earn well over $2/share with the stock trading below $11 now. A P/E of 5 is absurd now that global growth has returned and most of their customers should see growth even in the US market. Not to mention that 5 years earnings growth is placed at 12.5%, meaning a fair valuation would be around $25.
The finalization of this merger should hopefully bring much more focus to how cheap the combined entity remains. Both stocks have rallied big time since the March 2009 lows, but they still remain insanely cheap on a historical basis. The risks of airlines going bankrupt is greatly reduced now that the financial crisis is largely over. Also, the inability of Boeing (BA) to produce its new plane has helped reduce the competition for their existing planes. It will now be years before those new planes reach a critical mass.
Investing, Long Term Investment, stock market | admin March 25, 2010
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