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Willis Lease Finance (WLFC) has been attracting attention after a strong past 3 months, with the stock up about 31%, even as the past month showed an 8% decline.
For readers tracking longer horizons, the company’s total return is about 17% over the past year and very large over 3 and 5 years, set against a current share price of $175.89 and market cap near $1.19b.
See our latest analysis for Willis Lease Finance.
Viewed together, the recent 2.7% 7 day share price return, the 8.3% 1 month share price decline and the 31.1% 3 month share price return suggest that momentum has cooled after a strong run.
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So with WLFC trading at $175.89, showing a value score of 2 and sitting about 8% below a US$190 analyst target but at a slight premium to one intrinsic estimate, is there still a buying opportunity here, or is the market already pricing in anticipated growth?
At a last close of $175.89 versus a narrative fair value of $195.26, the current price sits below what this widely followed view suggests.
The acquisition of nearly $1 billion in engines and aircraft, with a substantial portion being future technology assets like LEAP and GTF engines, is described as positioning the company with more valuable and in-demand assets. The signing of the new constant thrust deal for over 20 CFM56-7B engines is cited as indicating strong demand and efficient asset utilization, which the narrative links to potential enhancement of revenue streams and operational efficiency.
Want to see what stands behind that valuation gap? The narrative focuses on expectations for future revenue, margin shifts and a re rated earnings multiple.
Result: Fair Value of $195.26 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, higher interest rates lifting finance costs, along with potential maintenance challenges on complex LEAP and GTF engines, could quickly undermine this underpriced growth story.
Find out about the key risks to this Willis Lease Finance narrative.
While the popular narrative sees Willis Lease Finance as about 9.9% undervalued at $195.26, the SWS DCF model points the other way. On that cash flow view, an estimate of $29.74 per share suggests the current $175.89 price embeds a lot of optimism. Which set of assumptions do you find more realistic?
