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Is Aercap (AER) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Aercap (AER) is a stock many investors are watching right now. AER is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.18. This compares to its industry's average Forward P/E of 7.78. Over the past 52 weeks, AER's Forward P/E has been as high as 108.78 and as low as 5.12, with a median of 6.78.

Investors will also notice that AER has a PEG ratio of 0.88. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AER's industry has an average PEG of 0.94 right now. AER's PEG has been as high as 5.86 and as low as 0.28, with a median of 0.49, all within the past year.

Another notable valuation metric for AER is its P/B ratio of 0.88. 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 0.94. Over the past year, AER's P/B has been as high as 1.01 and as low as 0.62, with a median of 0.79.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AER has a P/S ratio of 2.17. This compares to its industry's average P/S of 2.82.

Finally, we should also recognize that AER has a P/CF ratio of 8.99. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. AER's current P/CF looks attractive when compared to its industry's average P/CF of 11.97. Over the past 52 weeks, AER's P/CF has been as high as 13.90 and as low as 2.74, with a median of 7.99.

Value investors will likely look at more than just these metrics, but the above data helps show that Aercap is likely undervalued currently. And when considering the strength of its earnings outlook, AER sticks out at as one of the market's strongest value stocks.


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