Shares of AerSale Corporation ASLE have lost 5% over the past month, underperforming the Zacks Aerospace-Defense Equipment industry’s rise of 16.2% as well as the broader Zacks Aerospace sector’s gain of 17%. It also came below the S&P 500’s return of 12.6% in the same time frame.
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On the contrary, other industry players like Astronics ATRO and Leonardo DRS DRS have delivered a stellar performance in the aforementioned period. Shares of ATRO and DRS have surged 55% and 18.2%, respectively, over the past month.
Despite a global surge in aircraft fleet expansion and the consequent rise in demand for maintenance, two key growth drivers for aerospace services stocks like ASLE, the company appears to have failed to capitalize on these favorable trends. While industry peers have seen notable gains on the bourses over the past month, such poor performance by AerSale might prompt investors to divest the stock.
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However, a prudent investor is well aware of the fact that a sound stock investment strategy looks beyond individual events and considers the overall fundamentals and long-term outlook of a company. So, before making any hasty decision, let’s delve into what led to the stock’s recent dismal share price performance, whether there is room for growth in the future, and if there’s any risk to investing in it.
What Pulled Down ASLE Stock?
The primary reason behind ASLE’s dismal performance over the past month was its disappointing first-quarter 2025 financial results.
Notably, AerSale registered a 27.4% year-over-year decline in its first-quarter revenues. This decline was mainly attributed to a substantial reduction in whole asset sales, with only one engine sold during the quarter compared to one aircraft and four engines in the first quarter of 2024.
The bottom line also reflected deterioration from the year-ago quarter’s reported figure and missed analysts’ estimates.
Moreover, following ASLE’s first-quarter earnings release, Royal Bank of Canada lowered its price target for the stock by 12.5%. This might have made investors additionally cautious about ASLE, which got duly reflected in its share price fall over the past month.
Will ASLE Rebound or Continue With Its Downfall?
Despite the recent setbacks in its quarterly performance, AerSale’s management remained optimistic, as it cited solid growth in the company’s core business segments (excluding whole asset sales), with a 23.4% revenue increase, driven by strong demand for Used Serviceable Material (“USM”). Management also highlighted a robust inventory position and ongoing strategic initiatives, which are expected to improve performance through 2025.
To this end, we may say that steadily growing global air traffic and the resultant increase in demand for maintenance, repair, and overhaul (MRO) services are likely to support future demand for AerSale’s USMs, engineered solutions, and leased aircraft and engines.
This broader industry trend is also projected to fuel growth for ASLE’s industry peers, such as Astronics and Leonardo DRS. Notably, Astronics continues to deliver advanced technologies for global aerospace providers, while Leonardo DRS caters to commercial aerospace with power and electro-optical systems.
Meanwhile, AerSale ended first-quarter 2025 with $11 million in cash and just $5 million in total debt (long-term and short-term), reflecting strong solvency. This gives the company the flexibility to invest in next-generation innovations, such as its AerAware Enhanced Flight Vision System, which is expected to expand its footprint in aerospace solutions.
However, despite presenting strong growth opportunities, ASLE faces some investment risks. A key concern is the recent imposition of import tariffs by the U.S. government on almost all its trading partners, which has the potential to disrupt the global aerospace supply chain. To this end, industry experts have expressed concerns that these tariffs can create potential delays in the USM market. This can impact the demand trend for ASLE’s USMs and thereby hurt its operational performance.
In fact, the increased costs and logistical complexities arising from this tariff imposition have the potential to significantly hurt ASLE’s industry peers like Astronics and Leonardo DRS.
Moreover, while innovations like AerAware offer competitive advantages, commercial adoption rates could be slower than anticipated, limiting expected revenue gains.
Next, let’s take a look at whether ASLE’s upcoming earnings and sales estimates align with management’s optimism.
ASLE’s Estimates
The Zacks Consensus Estimate for second and third-quarter 2025 sales suggests year-over-year growth. However, the same for 2025 implies a slight drop, while that for 2026 sales indicates an improvement.
On a bright note, the company’s near-term earnings estimates, both quarterly and annual, suggest solid improvement.
However, the downward revision in the majority of its near-term earnings estimates over the last 60 days indicates that investors are losing confidence in this stock’s earnings capabilities.
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Image Source: Zacks Investment Research
Zacks Investment Research
Image Source: Zacks Investment Research
ASLE Trading Cheap
In terms of valuation, ASLE’s forward 12-month price-to-earnings (P/E) is 10.92X, a discount to its peer group’s average of 36.06X. This suggests that investors will be paying a lower price than the company's expected earnings growth compared to that of its peer group.
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Image Source: Zacks Investment Research
On the other hand, ASLE’s industry peers are trading at a premium. While ATRO is trading at a forward 12-month P/E of 19.08X, DRS is trading at 36.20X.
Should You Buy ASLE Stock Now?
Despite trading at a discount, AerSale appears to be veering into value trap territory, as evident from its weak Value Score of D and dismal share price performance compared to its industry peers.
With disappointing quarterly results and import tariffs likely to disrupt its USM business, investors may want to consider exiting this stock before further erosion in value sets in.
The company’s Zacks Rank #4 (Sell) further supports our thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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