GATX (GATX) and Avolon (AVOL) Critical Review

GATX (NYSE: GATX) and Avolon (NYSE:AVOL) are both mid-cap transportation companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, dividends, risk, earnings and valuation.

Profitability

This table compares GATX and Avolon’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GATX 13.76% 14.51% 2.85%
Avolon 28.83% 14.90% 3.31%

Analyst Ratings

This is a summary of recent recommendations and price targets for GATX and Avolon, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GATX 1 4 1 0 2.00
Avolon 0 0 0 0 N/A

GATX presently has a consensus price target of $55.60, suggesting a potential downside of 11.05%. Given GATX’s higher possible upside, research analysts plainly believe GATX is more favorable than Avolon.

Earnings and Valuation

This table compares GATX and Avolon’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GATX $1.42 billion 1.69 $257.10 million $4.81 13.00
Avolon N/A N/A N/A $1.83 16.90

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

Dividends

GATX pays an annual dividend of $1.68 per share and has a dividend yield of 2.7%. Avolon does not pay a dividend. GATX pays out 34.9% of its earnings in the form of a dividend.

Summary

GATX beats Avolon on 5 of the 9 factors compared between the two stocks.

About GATX

GATX Corporation is a global railcar lessor, owning fleets in North America, Europe, and Asia. In addition, the Company operates fleet of the United States-flagged vessels on the Great Lakes and jointly with Rolls-Royce plc, it owns aircraft spare engine lease portfolios in the world. It operates through four business segments: Rail North America, Rail International, American Steamship Company (ASC), and Portfolio Management. As of December 31, 2016, it owned fleet of approximately 146,300 railcars. It offers customers leasing, maintenance, asset, financial, and management expertise. It leases tank cars, freight cars, and locomotives in North America, tank cars and freight cars in Europe and freight cars in India and Russia. As of December 31, 2016, it also had an ownership interest in an affiliate investment that owned approximately 2,200 railcars, and it managed approximately 400 railcars for other third-party owners.

About Avolon

Avolon Holdings Limited (Avolon Holdings) is a United States-based holding company, which provides aircraft leasing and lease management services. The Company operates through its wholly owned subsidiary Avolon S.a r.l. (Avolon), which is a global aircraft leasing company focused on acquiring, managing and selling commercial aircraft. Avolon’s owned, managed and committed Portfolio comprises 227 aircraft, including 122 owned, 12 managed and 93 committed aircraft. Avolon’s owned portfolio comprises primarily of narrowbody aircraft, including the Airbus A320 family and the Boeing 737-800, and select widebody aircraft, including the Airbus A330, the Boeing 777 and the Boeing 787. Avolon’s committed Portfolio includes 66 next generation Airbus A320neo, Boeing 737 MAX, Airbus A330neo and Boeing 787 family of aircraft. Avolon has a customer base of 49 customers across 27 countries across the world.

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