AerCap Holdings (NYSE:AER) has reached a leasing milestone with the delivery of its tenth Boeing 787 aircraft to Grupo Aeroméxico. This aircraft is AerCap's 100th 787 from its direct Boeing orderbook.

The latest Dreamliner delivery comes as AerCap Holdings trades at US$147.56, with the share price return up 5.26% over the past 90 days while the 1 year total shareholder return of 23.70% points to solid longer term momentum.

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Bulls see AerCap's widebody scale and recent 787 milestone as supporting the current share price. Bears point to declining revenue and net income growth. Which side does the valuation argument support next?

Most Popular Narrative: 17.5% Undervalued

The most followed narrative for AerCap Holdings pegs fair value at $178.90, above the last close at $147.56, and anchors that gap in aircraft supply and capital deployment assumptions.

• Robust, broad-based growth in global passenger and especially international air travel, led by APAC and the Middle East, continues to drive high aircraft utilization (99%) and lease extension rates (97%), supporting stable and accelerating lease revenues.

• Sustained supply chain constraints and OEM production delays are keeping aircraft and engine supply tight, pushing lease rates higher and boosting asset values, thereby expanding AerCap's net margins and supporting gains on asset sales.

Want to understand why this narrative still arrives at a higher fair value for AerCap Holdings even with modeled revenue and earnings declines? The answer sits in how margins, future earnings power, and the assumed valuation multiple fit together in a way that current pricing does not fully reflect.

Result: Fair Value of $178.90 (UNDERVALUED)

However, AerCap Holdings investors also need to weigh the risk that higher aircraft deliveries create oversupply and that financially stressed airline customers trigger credit losses or impairments.

Next Steps

With AerCap Holdings attracting both optimism around scale and concerns around financial risks, it helps to move fast and test the assumptions yourself by reviewing the detailed breakdown of 4 key rewards and 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.