AerSale has gotten torched over the last six months - since February 2026, its stock price has dropped 23.9% to $5.77 per share. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Is now the time to buy AerSale, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Do We Think AerSale Will Underperform?
Even with the cheaper entry price, we’re sitting this one out for now. Here are three reasons you should be careful with ASLE, plus one stock we’d rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, AerSale grew its sales at a sluggish 3.4% compounded annual growth rate. This was below our standard for the industrials sector.
2. Free Cash Flow Margin Dropping
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, AerSale’s margin dropped by 35 percentage points over the last five years. Almost any movement in the wrong direction is undesirable because it is already burning cash. If the trend continues, it could signal it’s becoming a more capital-intensive business. AerSale’s free cash flow margin for the trailing 12 months was negative 13.2%.
3. New Investments Fail to Bear Fruit as ROIC Declines
We like to invest in businesses with high returns, but the trend in a company’s ROIC can also be an early indicator of future business quality.
Over the last few years, AerSale’s ROIC has unfortunately decreased. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.
Final Judgment
AerSale falls short of our quality standards. Following the recent decline, the stock trades at 20.9× forward P/E (or $5.77 per share). This valuation tells us a lot of optimism is priced in - we think there are better opportunities elsewhere. We’d suggest looking at the Amazon and PayPal of Latin America.
Stocks We Would Buy Instead of AerSale
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Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
