AerSale (NASDAQ:ASLE) Misses Q4 CY2025 Revenue Estimates

Aerospace and defense company AerSale (NASDAQ:ASLE) fell short of the market’s revenue expectations in Q4 CY2025, with sales falling 4% year on year to $90.94 million. Its non-GAAP profit of $0.16 per share was 17.9% below analysts’ consensus estimates.

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Company Overview

Providing a one-stop shop that integrates multiple services and product offerings, AerSale (NASDAQ:ASLE) delivers full-service support to mid-life commercial aircraft.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, AerSale grew its sales at a solid 9.9% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. AerSale’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Products and Services, which are 63.6% and 25.5% of revenue. Over the last two years, AerSale’s Products revenue was flat while its Services revenue averaged 9.8% year-on-year declines.

This quarter, AerSale missed Wall Street’s estimates and reported a rather uninspiring 4% year-on-year revenue decline, generating $90.94 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 20.1% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will catalyze better top-line performance.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

AerSale was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.2% was weak for an industrials business.

Looking at the trend in its profitability, AerSale’s operating margin decreased by 11.9 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. AerSale’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q4, AerSale generated an operating margin profit margin of 7.8%, up 2.5 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

AerSale’s full-year EPS dropped 161%, or 27.1% annually, over the last four years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, AerSale’s low margin of safety could leave its stock price susceptible to large downswings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

AerSale’s EPS grew at an astounding 109% compounded annual growth rate over the last two years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.

Diving into AerSale’s quality of earnings can give us a better understanding of its performance. AerSale’s operating margin has expanded over the last two yearswhile its share count has shrunk 7.3%. Improving profitability and share buybacks are positive signs for shareholders as they juice EPS growth relative to revenue growth.

In Q4, AerSale reported adjusted EPS of $0.16, up from $0.09 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects AerSale’s full-year EPS of $0.35 to grow 84.3%.

Key Takeaways from AerSale’s Q4 Results

We struggled to find many positives in these results. Its revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 4.2% to $7.00 immediately after reporting.

AerSale underperformed this quarter, but does that create an opportunity to invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).