Aaron's (NYSE: AAN) and AerCap (NYSE:AER) are both mid-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, institutional ownership, valuation, analyst recommendations and risk.
This table compares Aaron's and AerCap’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Aaron's pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. AerCap does not pay a dividend. Aaron's pays out 4.7% of its earnings in the form of a dividend. Aaron's has raised its dividend for 11 consecutive years.
This is a summary of recent ratings and recommmendations for Aaron's and AerCap, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Aaron's currently has a consensus target price of $46.50, suggesting a potential upside of 0.54%. AerCap has a consensus target price of $59.78, suggesting a potential upside of 15.71%. Given AerCap’s stronger consensus rating and higher probable upside, analysts clearly believe AerCap is more favorable than Aaron's.
Valuation and Earnings
This table compares Aaron's and AerCap’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Aaron's||$3.38 billion||0.96||$292.53 million||$2.56||18.07|
|AerCap||$5.04 billion||1.62||$1.08 billion||$6.33||8.16|
AerCap has higher revenue and earnings than Aaron's. AerCap is trading at a lower price-to-earnings ratio than Aaron's, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
84.5% of AerCap shares are owned by institutional investors. 2.3% of Aaron's shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Risk and Volatility
Aaron's has a beta of 0.05, indicating that its stock price is 95% less volatile than the S&P 500. Comparatively, AerCap has a beta of 1.81, indicating that its stock price is 81% more volatile than the S&P 500.
AerCap beats Aaron's on 12 of the 18 factors compared between the two stocks.
Aaron’s, Inc. (Aaron’s) is an omnichannel provider of lease-purchase solutions. The Company engages in the sales and lease ownership and specialty retailing of furniture, consumer electronics, home appliances and accessories through its Company-operated and franchised stores in Canada, as well as its e-commerce platform, Aarons.com. Its segments include Sales and Lease Ownership, Progressive Finance Holdings, LLC (Progressive), Dent-A-Med, Inc., doing business as the HELPcard (DAMI), Franchise and Manufacturing. Its stores carry brands, such as Samsung, Frigidaire, Hewlett-Packard, LG, Whirlpool, Simmons, Philips, Ashley and Magnavox. As of December 31, 2016, it had 1,864 Aaron’s stores, consisted of 1,165 Company-operated stores in 28 states, the District of Columbia and Canada, and 699 independently-owned franchised stores in 46 states and Canada. It owns trademarks and trade names used in business, including Progressive, Dent-A-Med, the HELPcard and Woodhaven Furniture Industries.
AerCap Holdings N.V., an aircraft leasing company, engages in the lease, financing, sale, and management of commercial aircraft and engines in Mainland China, Hong Kong, Macau, the United States, Ireland, and internationally. The company provides aircraft asset management services, including remarketing aircraft; collecting rental and maintenance rent payments, monitoring aircraft maintenance, monitoring and enforcing contract compliance, and accepting delivery and redelivery of aircraft; and conducting ongoing lessee financial performance reviews. Its aircraft asset management services also comprise periodically inspecting the leased aircraft; coordinating technical modifications to aircraft to meet new lessee requirements; conducting restructuring negotiations in connection with lease defaults; repossessing aircraft; arranging and monitoring insurance coverage; registering and de-registering aircraft; arranging for aircraft and aircraft engine valuations; and providing market research services. In addition, the company offers cash management services, including treasury services, such as the financing, refinancing, hedging, and ongoing cash management of vehicles; and administrative services comprising accounting and secretarial services consisting of the preparation of budgets and financial statements, and liaising with the rating agencies. Further, it provides engine leasing; certified aircraft engines, airframes, and engine parts; and supply chain solutions. Additionally, the company sells airframe parts to airlines, maintenance, and repair and maintenance service providers, as well as aircraft parts distributors. As of December 31, 2017, it owned and managed a fleet of 1,531 aircraft. AerCap Holdings N.V. was founded in 1995 and is headquartered in Dublin, Ireland.
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