Aircastle Limited (NYSE: AYR), a global company that leases and sells commercial jet aircrafts, declared its quarterly results a few weeks ago. The company's strong financial health is well reflected in its quarterly numbers. Let's analyze the numbers from Capital IQ, a division of Standard & Poor's, to see if Aircastle is truly prepared to take flight.
Numbers give us a direction
Total revenue for the company increased to $157.9 million from $130.5 million in the first quarter of 2010, a gain of approximately 21%. This was mainly because of an increase in revenues from lease and rental services. Accordingly, net income ballooned 125% to $42.7 million from $18.1 million in the year-ago quarter. Although that's a substantial leap, it only tells half the story, and we need to discover more.
Digging deeper
It's always important to check how much profit Aircastle generates from shareholders' money -- that is to say, how efficiently it operates. Return on equity gives a clear idea on precisely this.
Aircastle's ROE increased from 5.8% in first quarter of 2010 to 12.5% this quarter. That's a big leap. Its ROE is much better than its peer Atlas Air Worldwide (Nasdaq: AAWW), whose ROE stands at a mere 4% for the same period. That's pretty good number to hold shareholders' attention. Indeed, Aircastle makes good use of its investors' money.
The latest quarter's net income margin for Aircastle almost doubled to 26.5% from 13.9% in the corresponding quarter last year. Also, this is better than Atlas Air Worldwide and Aercap's (NYSE: AER) net income margin of 3.5% and 19.9%, respectively. It shows how efficiently Aircastle is able to convert its incremental revenues into income as compared with its rivals. It'd be best to hold on to this stock until rivals plan anything better.
Foolish bottom line
Air traffic volume is set to increase globally as economies recover from the economic meltdown. According to the International Air Transport Association, the demand for passenger traffic and cargo traffic increased by 5.9% and 4.6%, respectively, in the first quarter this year, compared with the same period last year.
Aircastle has a fleet base of 134 aircrafts, and of those, 92% are latest-generation aircrafts. This cuts down the possibility of greater wear and tear and high maintenance costs. It has a "weighted average" fleet utilization rate of almost 99% in the first quarter of 2011. This efficiency will give it a good advantage to service the growing demand in both passenger and cargo traffic in the future.
Bibhudutta Subhasish does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
