AerCap (AER -0.98%) reported its fourth-quarter earnings Wednesday morning and beat estimates on the top line. However, it failed to meet analysts' bottom-line expectations. This was likely the driver of the stock's initial loss of altitude in early trading, but as investors delve deeper into the aircraft leasing company's results, it seems that they're finding less cause for disappointment.
After having lost as much as 11.8% earlier in the trading session, as of 12:05 p.m. ET, AerCap's stock was down by just 6%.
While analysts' consensus expectation was that AerCap would book revenue of $1.27 billion in Q4, it reported sales of $1.44 billion. While that was a 40% year-over-year gain, it's worth noting that management attributed the increase not to organic growth, but to its acquisition of GECAS. The bottom line, however, is likely the cause of the stock's turbulence. Analysts had expected the company to report earnings per share of $1.95, but AerCap undershot that significantly, booking earnings per share of $1.04.
Despite the earnings miss, there were some encouraging signs elsewhere in the report. For one, AerCap ended 2021 with a leverage ratio of 2.66 -- a success for the company. During the third-quarter conference call in November, management noted that the company's leverage pro forma ratio after the GECAS acquisition was 2.8, and said they aspired to reduce that ratio to 2.7 in 2022.
Stronger cash flow represented another bright spot as the company navigates out of the challenges it experienced during the height of the pandemic. AerCap reported operating cash flow of $1.7 billion in Q4 -- a notable increase over the $788 million that it generated in Q3 and the $653 million that it reported in Q4 2020.
While AerCap had a lot to celebrate in the fourth quarter, it's important to recognize that Russia's invasion of Ukraine remains a headwind for the company. Management characterized the company's exposure to Russia as "manageable," but investors can expect the company to write down Russian assets in the current quarter.