NEW YORK (TheStreet) -- Shares of AerCap Holdings (AER) were falling 2.6% to $49.05 on heavy trading volume Thursday after the aircraft leasing company announced the pricing of the secondary offering of 71,184,686 ordinary shares sold by AIG (AIG).
AerCap set the price of the 71,184,686 shares at $49 a share. The underwriters of the offering will have a 30-day option to buy up to 10,677,702 additional ordinary shares.
The size of the secondary offering was increased from its original size of 50 million ordinary shares.
AerCap said it will also repurchase 15,698,588 ordinary shares from AIG for $750 million, or about $47.77 a share.
AIG is expected to no longer beneficially own any AerCap ordinary shares following the offering.
About 9.1 million shares of AerCap were traded by 9:46 a.m. Thursday, well above the company's average trading volume of about 967,000 shares a day.
TheStreet Ratings team rates AERCAP HOLDINGS NV as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AERCAP HOLDINGS NV (AER) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AER's very impressive revenue growth greatly exceeded the industry average of 5.0%. Since the same quarter one year prior, revenues leaped by 393.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- AERCAP HOLDINGS NV reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, AERCAP HOLDINGS NV increased its bottom line by earning $4.18 versus $2.56 in the prior year. This year, the market expects an improvement in earnings ($5.40 versus $4.18).
- The gross profit margin for AERCAP HOLDINGS NV is currently very high, coming in at 92.97%. Regardless of AER's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AER's net profit margin of 25.34% significantly outperformed against the industry.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Trading Companies & Distributors industry and the overall market, AERCAP HOLDINGS NV's return on equity is below that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 3.69 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- You can view the full analysis from the report here: AER Ratings Report