Reviewing Neff Corporation (NYSE:NEFF) & Aircastle Limited (AYR)

Aircastle Limited (NYSE: AYR) and Neff Corporation (NYSE:NEFF) are both small-cap transportation companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Profitability

This table compares Aircastle Limited and Neff Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aircastle Limited 15.75% 7.41% 1.85%
Neff Corporation 3.26% -9.21% 1.81%

Analyst Ratings

This is a summary of current ratings and price targets for Aircastle Limited and Neff Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aircastle Limited 1 7 1 0 2.00
Neff Corporation 0 3 2 0 2.40

Aircastle Limited presently has a consensus target price of $24.33, suggesting a potential upside of 11.26%. Neff Corporation has a consensus target price of $20.20, suggesting a potential downside of 18.71%. Given Aircastle Limited’s higher possible upside, analysts plainly believe Aircastle Limited is more favorable than Neff Corporation.

Insider and Institutional Ownership

62.8% of Aircastle Limited shares are owned by institutional investors. Comparatively, 88.1% of Neff Corporation shares are owned by institutional investors. 2.7% of Aircastle Limited shares are owned by company insiders. Comparatively, 9.0% of Neff Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Aircastle Limited pays an annual dividend of $1.04 per share and has a dividend yield of 4.8%. Neff Corporation does not pay a dividend. Aircastle Limited pays out 62.7% of its earnings in the form of a dividend. Neff Corporation has raised its dividend for 6 consecutive years.

Earnings and Valuation

This table compares Aircastle Limited and Neff Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aircastle Limited $820.09 million 2.10 $130.66 million $1.66 13.17
Neff Corporation $407.74 million 0.54 $104.75 million $1.42 17.50

Aircastle Limited has higher revenue and earnings than Neff Corporation. Aircastle Limited is trading at a lower price-to-earnings ratio than Neff Corporation, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Aircastle Limited has a beta of 1.81, indicating that its share price is 81% more volatile than the S&P 500. Comparatively, Neff Corporation has a beta of 3.41, indicating that its share price is 241% more volatile than the S&P 500.

Summary

Aircastle Limited beats Neff Corporation on 9 of the 17 factors compared between the two stocks.

About Aircastle Limited

Aircastle Limited is a holding company. The Company, through its subsidiaries, acquires, leases and sells commercial jet aircrafts to airlines. The Company is engaged in financing and managing commercial flight equipment. The Company manages its aircrafts in the United States, Ireland and Singapore. As of December 31, 2016, the Company owned and managed on behalf of its joint ventures 206 aircrafts leased to 71 lessees located in 36 countries. The Company originates acquisitions and sales through relationships with airlines, other aircraft lessors, financial institutions and brokers, as well as other sources. As of February 7, 2017, the Company had lease commitments or letters of intent to lease or sell 16 aircrafts. The Company’s aircraft portfolio includes passenger wide-body, passenger narrow-body and freighter aircrafts. The Company’s portfolio spans across various regions, such as the Middle East and Africa, South America, North America, Asia and Pacific, and Europe.

About Neff Corporation

Neff Corporation is an equipment rental company. The Company offers an array of equipment rental solutions for its customer base, including infrastructure, non-residential construction, oil and gas, and residential construction customers. Its fleet of equipment includes earthmoving, material handling, aerial and other rental equipment. Its earthmoving equipment category includes excavators, backhoes, loaders, bulldozers, mini-excavators, sweepers and tractors, track loaders and skid steers. Its material handling equipment category includes reach forklifts, industrial forklifts and straight-mast forklifts. Its aerial equipment category includes personnel lifts, electric scissor lifts, dual fuel scissor lifts, articulating boom lifts and straight boom lifts. Its other rental equipment category includes compaction and concrete, trucks and trailers, sweepers, generators, welders, lighting, pumps and other small equipment and tools. As of December 31, 2016, it had operated 69 branches.

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