Why FTAI Aviation Stock Went Flying Today

Key Points

• FTAI Aviation beat on the top and bottom lines last night.

• Rising revenue and falling costs flipped the airplane-leasing company from a loss to a profit.

• Guidance is for 25% earnings growth in Q3.

• 10 stocks we like better than Ftai Aviation ›

Shares of FTAI Aviation (NASDAQ: FTAI), the airplane leasing company, soared to close up 26.6% on Wednesday after reporting a sizable earnings beat Tuesday evening.

Heading into the report, analysts forecast FTAI to earn $1.26 per share on $542.6 million in sales. In fact, FTAI earned $1.57 per share on sales of $676.2 million.

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FTAI Q2 earnings

FTAI grew its revenue 52% year over year in Q2, and cut its operating costs by 23%, flipping the company from a big quarterly loss a year ago ($2.26 per share) to $1.57 in positive profit this time around. Profits also grew sequentially -- up 80% from Q1.

Best of all, FTAI reported positive free cash flow of $400 million, or three times its reported net profit.

Is FTAI stock a buy?

And there could be more good news in store. Although FTAI didn't itself provide earnings guidance, analysts who follow the stock predict earnings next quarter will show about 25% annual growth to $1.06 per share, rising right in line with sales growth -- predicted at 24%.

FTAI lost money last year, but is forecast to earn $4.42 per share this year -- and to double that number over the next two years. With a share price of more than $144, that works out to a price-to-earnings ratio of about 32.5 -- expensive, but perhaps not too expensive to buy if profits are really going to double in a couple of years. In fact, at the $8.85-per-share forecast for 2027, the stock costs only about 16x fiscal 2027 earnings.

It's tough to make predictions, especially about the future. Still, the future is looking pretty bright for FTAI stock.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.