Willis Lease Finance (WLFC) Could Be 34% Below Fair Value As Mixed Earnings Land

Willis Lease Finance (WLFC) just reported third quarter results that paired higher sales and revenue with lower net income and earnings per share, a mix that is already shaping how investors interpret the stock’s recent move.

At a share price of US$46.86, Willis Lease Finance has seen a sharp 7 day share price return of 12.64% and a 30 day share price gain of 14.63%. However, the 90 day share performance has fallen 17.18%, and short term momentum is only partially aligned with its 4.82% year to date share price return and much stronger 1 year, 3 year and 5 year total shareholder returns of 17.86%, 233.42% and 266.09% respectively, as investors weigh the recent dividend declaration and the mixed third quarter earnings against that longer performance record.

Scan how Willis Lease Finance compares with other aircraft and industrial lessors by checking our curated list of list of solid balance sheet and fundamentals (25 results) in similar capital intensive sectors.

Bulls point to Willis Lease Finance’s long term return record and recent revenue gains, while bears fixate on the earnings drop. Which side does the current valuation actually lean toward?

Most Popular Narrative: 34% Undervalued

Against a last close of $46.86, the most followed narrative for Willis Lease Finance pegs fair value at $70.50 using a 9.11% discount rate. This frames today’s move against a much higher long run earnings and cash flow profile.

The refinancing and expansion of credit facilities described earlier now sit alongside a US$1.75b corporate revolver, US$200m of 2.5% convertible senior notes used to delever that revolver, and relatively low reported leverage of about 2.7 to 2.8x, which together provide capacity to support further asset and AUM growth that can influence revenue and net margins.

See why 0 investors see Willis Lease Finance as 34% undervalued.

Result: Fair Value of $70.50 (UNDERVALUED)

Still, higher finance costs and governance investigations around executive pay sit in the background as potential spoilers for the bullish Willis Lease Finance story.

Find out about the key risks to this Willis Lease Finance narrative.

Another View: SWS DCF Model Flags A Very Different Story

The first narrative around Willis Lease Finance leans on earnings, cash flows and a fair value of $70.50, yet the Simply Wall St DCF model points in the opposite direction. On that measure, WLFC at $46.86 trades well above an estimated future cash flow value of $11.43, which frames the stock as expensive rather than cheap. Which view do you trust more: the earnings path or the cash flow math?

For readers who want to unpack how this cash flow based estimate is built step by step, Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Willis Lease Finance for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 38 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

Sentiment on Willis Lease Finance is split. This makes it a useful moment to move quickly, study the underlying data, and decide where you stand on its 3 key rewards and 4 important warning signs

Looking For More Investment Ideas Beyond Willis Lease Finance?

If Willis Lease Finance has you thinking harder about opportunities, do not stop here. Broaden your watchlist now so you are not late to the next move.

This article is general in nature and was produced with the assistance of AI automation, based on data and analysis from Simply Wall St. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include WLFC.

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