AerCap Sets 2026 EPS Guidance at $12-$13, Capping Record 2025 Performance

What happened

In its Q4 earnings call, AerCap management highlighted a record 2025 driven by robust aircraft sales activity, strong leasing demand, and significant insurance recoveries from the Ukraine conflict. This aligns with the DeepValue report's findings of AerCap's scale advantage in a tight aircraft supply market, with utilization near 99% and a 97% lease extension rate. However, the report cautions that recent earnings have been inflated by one-time gains, with normalized adjusted EPS for 2025 estimated around $11.60, underscoring the need to look beyond transient boosts. The newly announced 2026 adjusted EPS guidance of $12 to $13, excluding gains on asset sales, projects continued strength but hinges on sustained lease rates and trading margins in a potentially peaking cycle. Despite the positive outlook, the report warns of crowded investor sentiment and elevated valuations after a 51% stock rally, urging scrutiny of execution risks and macroeconomic headwinds.

Implication

Investors should view the 2026 EPS guidance as confirmation that AerCap expects to maintain its momentum in a favorable market, yet the DeepValue report indicates this optimism is largely priced in at current levels. Key risks include a potential drop in utilization below 96%, compression in gain-on-sale margins, or a rise in adjusted debt/equity above 2.5x, which could threaten the thesis. The crowded bullish narrative means there is limited margin for error, and any signs of normalization in aircraft supply or lessee credit stress could prompt a sharp revaluation. Therefore, while the guidance supports incremental buying on price dips, aggressive positioning at current valuations may expose investors to heightened volatility. Monitoring quarterly utilization, lease extensions, and trading gains will be critical to assessing whether the projected EPS growth is sustainable beyond short-term tailwinds.

Thesis delta

The new guidance does not materially alter the DeepValue thesis, which already anticipates high-teens EPS growth from core leasing and capital returns in a tight market. It reinforces the base case scenario but highlights the ongoing reliance on sustained supply constraints and disciplined capital allocation. However, it underscores the need for vigilance on normalization risks, as the guidance assumes continued strength without major disruptions.