WLFC Rallies 35% in 6 Months: Should You Buy the Stock?

Willis Lease Finance Corporation WLFC shares have climbed 35.3% in the past six months compared with the industry’s 21.8% growth. The company has outperformed other industry players, including Air Lease Corporation AL and Ryder System, Inc. R. Shares of AL and R have gained 7.2% and 18%, respectively, in the same time frame. Sustained aviation supply-demand imbalances, firm lease rates, institutional capital partnerships, in-house technical capabilities and long-term service agreements drive recurring cash flows and earnings visibility for WLFC.

A Key Look Into WLFC’s Business Operations

WLFC is a leading lessor and servicer of commercial aircraft and engines, focused on generating shareholder value through leasing, asset management, and spare parts sales. As of Sept. 30, 2025, its portfolio included 354 engines, 20 aircraft, one marine vessel and other equipment leased to 69 lessees in 37 countries, with most revenues derived from Leasing and Related Operations. WLFC primarily provides triple-net operating leases, retaining residual value risk while lessees cover maintenance and related costs. The company also earns maintenance reserves and management fees, and manages additional assets for third parties. Through subsidiaries Willis Aero and Willis Asset Management, WLFC sells engine parts and provides engine management and consulting services.

WLFC’s Key Tailwinds

WLFC is benefiting from sustained strength in the aviation market, as airlines continue to face tight aircraft and engine supply. In the third quarter of 2025, lease rent revenues rose to $76.6 million, while maintenance reserve revenues reached $76.1 million, reflecting strong utilization and demand for spare engines. Management noted that lease rates remain firm and that the portfolio is positioned to capture ongoing supply-demand imbalances, supporting recurring cash flows and earnings visibility.

The company’s expanding asset management and credit strategies represent another meaningful tailwind. In December 2025, WLFC announced a partnership with Liberty Mutual Investments to deploy up to $600 million into engine loans and loan-like financings. In January 2026, it also formed a strategic aircraft engine leasing partnership with Blackstone Credit & Insurance, targeting over $1 billion of deployments over two years. These alliances diversify funding, accelerate growth and scale fee-based income streams.

Operational integration and in-house technical capabilities are further strengthening margins and asset control. In February 2026, WLFC launched Willis Module Shop, successfully completing its first core engine restoration with strong EGT margin recovery. In parallel, it partnered with CFM International on a program to extend the operational life of CFM56 engines. These initiatives enhance lifecycle management, reduce maintenance costs and improve long-term asset returns.

Finally, WLFC’s vertically integrated service offerings and long-term programs such as ConstantThrust support durable customer relationships and recurring revenues. In February 2026, the company signed a multi-year ConstantThrust agreement with Nauru Airlines covering seven CFM56-7B engines. Combined with consistent capital returns, including a recently declared 40 cents per share quarterly dividend, these factors underscore financial strength and confidence in sustained growth.

Challenges Persist for WLFC’s Business

The company faces pressure from rising financing costs and balance sheet leverage. Net finance costs increased meaningfully due to a higher overall debt balance and new securitizations, lifting quarterly interest expense. At the same time, it recorded $10.2 million of equipment write-downs in the third quarter as several engines were impaired and moved to held for sale. 

Depreciation also climbed with portfolio growth and accelerated charges on older models, while technical expenses rose on higher engine repair activity, weighing on margins. Macro and policy dynamics add further strain. In addition, spare parts revenues can be lumpy and timing-dependent, and maintenance services revenue declined following the sale of the fleet management business.

WLFC’s Valuation

The company is cheaply priced compared with the industry average. Currently, WLFC is trading at 5.02X trailing 12-month EV/sales value, below the industry’s average of 7.4X. The metric also remains lower than one of the company’s peers, Air Lease (8.79X), but remains higher than that of Ryder (1.23X).

Conclusion

Despite rising financing costs, higher leverage, equipment write-downs and margin pressure from elevated depreciation and technical expenses, WLFC remains supported by sustained aviation supply-demand imbalances, firm lease rates, expanding institutional partnerships, enhanced in-house technical capabilities and long-term service agreements that underpin recurring cash flows, earnings visibility and long-term shareholder returns.

Strong fundamentals, coupled with WLFC’s undervaluation, present a lucrative opportunity for investors to add the stock to their portfolio. 

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This article originally published on Zacks Investment Research (zacks.com).

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