AIG Stock Declines Following $3.7 Billion Sale of AerCap Stake

NEW YORK (TheStreet) -- American International Group (AIG) shares are down 0.66% to $60.70 in morning trading on Thursday after the insurer sold $3.7 billion worth of AerCap (AER) stock in a public offering that was much larger than it previously forecast.

AIG sold 71.2 million shares of the aircraft leasing company in a public offering Wednesday, significantly more that the 50 million shares the company originally said it would sell.

Following the completion of the sale, AIG's stake in the company fell to 5% from 46%.

The insurer acquired its stake in the company following its sale of International Lease Finance Corp. to AerCap for $7.6 billion in cash and stock last year.

AerCap said that it repurchased an additional 15.7 million of its shares from AIG.

AerCap shares are down 3.1% to $48.78 in trading today.

TheStreet Ratings team rates AMERICAN INTERNATIONAL GROUP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMERICAN INTERNATIONAL GROUP (AIG) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 53.4% when compared to the same quarter one year prior, rising from $1,609.00 million to $2,468.00 million.
  • Although AIG's debt-to-equity ratio of 0.30 is very low, it is currently higher than that of the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.5%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • AMERICAN INTERNATIONAL GROUP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AMERICAN INTERNATIONAL GROUP reported lower earnings of $5.21 versus $6.07 in the prior year. For the next year, the market is expecting a contraction of 5.0% in earnings ($4.95 versus $5.21).
  • You can view the full analysis from the report here: AIG Ratings Report

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