AerCap Holdings is Preparing for a Breakout

AerCap Holdings N.V. (NYSE:AER) has my rapt attention today after the impressive performance that it displayed in today’s session. The company with its market capitalization of 10.59B is an independent aircraft leasing company. The Company is engaged in leasing, financing, sales and management of commercial aircraft and engines. The Company owns 1,132 aircraft, including 1,100 aircraft held for operating lease, 27 aircraft under finance and sales-type lease, four aircraft that met the criteria for being classified as held for sale and one aircraft under contract to be parted-out, but excluding three aircraft owned by AeroTurbine.

Why is AerCap Holdings Hot Today?

The shares of AerCap have displayed a decent bullish streak today as the stock made a new 52-week high of $51.50 before it closed the session with 0.82% gains at $50.34. The shares of AerCap have been rising steadily as the stock recorded three new highs in the last one year. The stock shows a strong uptrend as its $50 closing price is higher than its 50-day moving average of $46.9. The 50-day moving average is higher than the 100-day moving average of $44.56, which is in turn higher than the 200-day moving average of $43.62.

AER Chart

The chart above shows how the shares of AerCap have traded within the last one year. You’ll observe that the stock experienced a resistance at the $50 trading price sometimes in August 2014. Interestingly, the stock has met that $50 resistance again as it closes at $50.34 today. The shares of AerCap have been trading in a range marked by a $47.5 support in the last one month and we can confidently say that a breakout has happened when the shares close above $50 in three consecutive sessions.

The Financials Support a Breakout

AerCap Holdings has consistently delivered positive earnings result in the last 5 quarters, and the company has beaten estimates in 18 out of the last 20 quarters. AerCap reported its first quarter (Q1 2015) results in May 11, and my optimism about the prospects of the stock stems from the quality of its financials. Highlights of the first quarter results are presented below:

  • Reported net income of $311.5 million, compared with $54.7 million for the same period in 2014. Reported basic earnings per share of $1.47, compared with $0.48 for the same period in 2014.
  • Adjusted net income of $304.6 million, compared with $77.8 million for the same period in 2014. Adjusted basic earnings per share of $1.44, compared with $0.68 for the same period in 2014.
  • Total assets of $44.1 billion as of March 31, 2015 compared to $43.9 billion as of December 31, 2014.

How to Trade AER Options

Going forward, the market expects AerCap to report a 40.70% growth in revenue this year and another 2.20% growth in revenue next year. In addition, the market expects EPS to grow by 11.10% this year, 2.60% next year before it continues at an annual rate of 4.10% over the next 5 years.

The optimistic outlook on earnings and revenue should keep investor confidence high on the stock and options traders can expect to profit from trading AER call options. I recommend buying AER call options and you’ll do well to consider buying the AER Oct 2015 50.000 call (AER151016C00050000) at an asking price of $3.30.

— Daily Option Alerts

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