Aaron’s (NYSE: AAN) and Aircastle (NYSE:AYR) are both retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, dividends, earnings, valuation and risk.

Profitability

This table compares Aaron’s and Aircastle’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aaron’s 8.34% 11.22% 7.02%
Aircastle 20.50% 9.05% 2.42%

Volatility and Risk

Aaron’s has a beta of 0.05, meaning that its share price is 95% less volatile than the S&P 500. Comparatively, Aircastle has a beta of 1.86, meaning that its share price is 86% more volatile than the S&P 500.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Aaron’s $3.38 billion 0.92 $292.53 million $2.56 17.25
Aircastle $796.62 million 2.01 $147.87 million $1.87 10.92

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Aaron’s and Aircastle, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aaron’s 1 2 8 1 2.75
Aircastle 0 8 1 0 2.11

Aaron’s currently has a consensus price target of $46.50, indicating a potential upside of 5.30%. Aircastle has a consensus price target of $24.43, indicating a potential upside of 19.63%. Given Aircastle’s higher possible upside, analysts plainly believe Aircastle is more favorable than Aaron’s.

Institutional and Insider Ownership

60.9% of Aircastle shares are held by institutional investors. 2.3% of Aaron’s shares are held by insiders. Comparatively, 1.8% of Aircastle shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Aaron’s pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. Aircastle pays an annual dividend of $1.12 per share and has a dividend yield of 5.5%. Aaron’s pays out 4.7% of its earnings in the form of a dividend. Aircastle pays out 59.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Aaron’s has increased its dividend for 11 consecutive years and Aircastle has increased its dividend for 7 consecutive years.

Summary

Aaron’s beats Aircastle on 12 of the 18 factors compared between the two stocks.

About Aaron’s

Aaron's, Inc. operates as an omnichannel provider of lease-purchase solutions. It operates through three segments: Progressive Leasing, Aaron's Business, and DAMI. The company engages in the sale, lease ownership, and specialty retailing of furniture, consumer electronics, home appliances, and accessories. As of February 15, 2018, it operated approximately 1,726 company-operated and franchised stores in 47 states and Canada, as well as its e-commerce platform, Aarons.com. Aaron's, Inc. was founded in 1955 and is headquartered in Atlanta, Georgia.

About Aircastle

Aircastle Limited, through its subsidiaries, leases, finances, sells, and manages commercial flight equipment to airlines worldwide. The company also invests in other aviation assets. As of December 31, 2017, its aircraft portfolio comprised 236 aircraft leased to 81 lessees located in 43 countries. Aircastle Limited was founded in 2004 and is based in Stamford, Connecticut.

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