Aerospace and defense company AerSale (NASDAQ: ASLE) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 27.4% year on year to $65.78 million. Its non-GAAP loss of $0.05 per share was significantly below analysts’ consensus estimates.
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AerSale (ASLE) Q1 CY2025 Highlights:
- Revenue: $65.78 million vs analyst estimates of $89.29 million (27.4% year-on-year decline, 26.3% miss)
- Adjusted EPS: -$0.05 vs analyst estimates of $0.09 (significant miss)
- Adjusted EBITDA: -$1.70 million vs analyst estimates of $10.08 million (-2.6% margin, significant miss)
- Operating Margin: -10.1%, down from 5.2% in the same quarter last year
- Free Cash Flow was -$47.63 million compared to -$25.05 million in the same quarter last year
- Market Capitalization: $329.9 million
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.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. AerSale’s demand was weak over the last five years as its sales fell at a 2% annual rate. This was below our standards and suggests it’s a low quality business.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. AerSale’s recent performance shows its demand remained suppressed as its revenue has declined by 6.2% annually over the last two years. 
AerSale also breaks out the revenue for its most important segments, Products and Services, which are 56.4% and 32.2% of revenue. Over the last two years, AerSale’s Products revenue averaged 23.7% year-on-year declines while its Services revenue averaged 7.5% declines.
This quarter, AerSale missed Wall Street’s estimates and reported a rather uninspiring 27.4% year-on-year revenue decline, generating $65.78 million of revenue.
Looking ahead, sell-side analysts expect revenue to grow 23.5% 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
AerSale was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.9% was weak for an industrials business.
Looking at the trend in its profitability, AerSale’s operating margin decreased by 11.1 percentage points over the last five years. 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.
This quarter, AerSale generated an operating profit margin of negative 10.1%, down 15.3 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.
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 significantly 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 shorter period to see if we are missing a change in the business.
Sadly for AerSale, its EPS declined by more than its revenue over the last two years, dropping 83%. This tells us the company struggled to adjust to shrinking demand.
Diving into the nuances of AerSale’s earnings can give us a better understanding of its performance. AerSale’s operating margin has declined by 9 percentage points over the last two years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q1, AerSale reported EPS at negative $0.05, down from $0.10 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects AerSale to perform poorly. Analysts forecast its full-year EPS of $0.02 will hit $0.47.
Key Takeaways from AerSale’s Q1 Results
We struggled to find many positives in these results. Its revenue missed significantly and its EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 10.7% to $6.28 immediately after reporting.
AerSale didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock 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.
