FTAI AVIATION LTD. (FTAI): what the price requires

At today's price, FTAI AVIATION LTD. (FTAI) is priced for today's economics sustained for ~11.9 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/FTAI

Headline

FieldValue
TickerFTAI
CompanyFTAI AVIATION LTD.
Current price$210.53/sh
CompositionAerospace Products 77% / Aviation Leasing 23%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed18.5%
Operating margin today24.0%
Margin compression implied-5.5pp
Must persist for11.9y
Multiple paid38x operating income

The operating-margin requirement is derived from the framework's value band at year 5, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 11.3% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.1 years.

Reconcile: at the x-ray's 9.3% required return this reads ~7.8 years; the models below use their own rates.

How unusual the bet is: high

ReferenceValue
vs own history-0.80σ
cohort percentile (of 225 peers)80
sustained it ~10 years at this level14%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset3.00x4expensive
Earnings2.59x2expensive
Relative1.77x4expensive
Growth0.77x1justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=11)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noNegative/zero FCF — equity value floored at $0
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$89.952.34xyesP/E 24.87x (blended: static sector reference 18x + trailing (TTM) 41x), scenarios: 19.9x / 24.9x / 29.8x (bear / base = reference held flat / bull), EV/EBITDA 26.4x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$55.643.78xyesBV/sh $4.14, ROE (TTM) 124.3%, ke 9.3%
Two-Stage Excess ReturnAsset$568.300.37xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$272.860.77xyesRev $2.8B, growth 30% (input: historical growth; tapered), Terminal P/S: 6.2x / 7.7x / 9.3x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$175.701.20xyesEPS $5.02, growth 35% (input: historical EPS growth), PEG=1.17 (Fair)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset$94.722.22xyesBV $4.14 + 5yr PV of (ROE (TTM) 124.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$21.639.73xyes√(22.5 × EPS $5.02 × BVPS $4.14) — Graham's conservative floor
EV/EBITDA RelativeRelative$0.0121053.00xyesEBITDA $0.22B × sector EV/EBITDA 12.0x (excluded from median)
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$161.981.30xyesEPS $5.02 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$68.013.10xyesRevenue $2.84B × sector P/S 2.5x
PEG Fair ValueRelative$188.251.12xyesEPS $5.02 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$54.273.88xyesEPS $5.02 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$3.0b
Net debt / NOPAT (after-tax)5.81x
Net debt / operating income (pre-tax)4.73x
Interest coverage2.6x
Share count CAGR (buyback)-2.7%
Burning cashyes

Bullet Takeaways

Bull Case

One number decides this thesis: CFM56 module production, which doubled to 270 units in the first quarter from 138 a year earlier, against a full-year target of 1,050. If that ramp holds, the entire bull case follows; if it stalls, the price has nowhere to stand. The reason the metric matters so much is what it represents. The CFM56 is the workhorse engine on the global narrow-body fleet, and FTAI has built a lower-cost way to maintain it. Instead of the traditional full engine overhaul, FTAI repairs and exchanges modules, the major sub-assemblies of the engine, which is faster and cheaper for the airline. The 10-K describes the strategy expanding physically, through a "CFM56 engine maintenance repair and overhaul facility located at the Rome Fiumicino Airport in a joint venture "established to expand the Company's global engine maintenance capabilities and meet increasing demand for MRE services.

The financial result is a step-change in scale and margin. First-quarter revenue surged to $830.7 million from $502.1 million, driven mainly by higher CFM56 and V2500 engine and module sales, and net income rose to $137.9 million with diluted EPS of $1.29. The Aerospace Products segment grew adjusted EBITDA 70% to $222.6 million at a 30% margin. A 30% EBITDA margin on a maintenance business is the signal that FTAI's module approach is genuinely cheaper than the alternative, because airlines only switch to it if it saves them money while leaving FTAI a healthy spread.

The two-engine model gives the growth a foundation. Underneath the fast-growing aftermarket sits the aviation leasing book, which owns engines and aircraft and generates steady lease income. The leasing assets also feed the aftermarket with a supply of engines to tear down for modules, a vertical integration competitors lack. Management reaffirmed full-year total business-segment EBITDA of $1.625 billion, split between $1.05 billion from aerospace products and $575 million from leasing. The trailing return on equity is extraordinary, a function of generating large profits on a thin equity base, which is exactly what a high-return asset-light aftermarket layered on a leasing platform looks like. The bull case is that FTAI is in the early innings of converting the world's most common engine into a recurring, high-margin maintenance annuity.

Bear Case

Begin with the qualitative mismatch, before any ratio: FTAI is, at its foundation, an aircraft and engine leasing company, and leasing companies are capital-intensive, cyclical, and debt-funded, the opposite of the durable high-growth compounder the price assumes it to be. The market is paying a premium that only makes sense for a software-like recurring-revenue business, while the underlying assets are physical engines exposed to the airline cycle. The 10-K is explicit about that exposure: as a provider to the commercial aviation industry, the company is "greatly affected by the overall economic conditions and other trends that affect our customers and lessees in that industry, including any projected market growth that may not materialize or be sustainable. Air travel is cyclical, and FTAI's aftermarket volume rides on how many engines airlines are flying and maintaining. A downturn would hit both the leasing book and the module demand at once.

The valuation methods make the disconnect concrete. Only the forward-growth method reaches the price. The asset-based methods, built from a book value of just $4.14 per share, the earnings-power methods, and the peer-multiple methods all land far below $275.92 (June 27, 2026). The price requires the company to sustain a roughly 24% operating margin and compound for nearly fifteen years, an assumption the static methods refuse to make. The extraordinary trailing return on equity that looks so impressive is a leverage artifact: it is large profit divided by a very thin equity base, which inflates the ratio without indicating a fortress balance sheet. Strip the growth assumption and the business is worth a fraction of its price on what it has actually demonstrated.

The debt turns the cyclicality into real fragility. FTAI carries net debt above $3 billion against trailing operating income near $642 million, leaving leverage around 4.7 times and interest coverage of only about 2.6 times. That is thin coverage for a business whose cash flows move with the airline cycle, and the leasing model requires continuous capital to buy engines and aircraft. In a downturn, lease rates soften, aftermarket volume slows, and the debt service stays fixed, which is the squeeze that has historically broken leveraged leasing companies. The structural truth is that the price treats a leveraged, cyclical aviation-asset business as if it were a secular compounder, and the entire gap between what the business has earned and what the price demands rests on the module ramp continuing uninterrupted through whatever the airline cycle does next.

Valuation

The price is a bet on durable compounding that the static methods structurally cannot frame, and the spread between the methods is unusually wide. At $275.92, only the forward-growth method reaches the price. The asset-based methods, anchored on a book value of just $4.14 per share, the earnings-power methods, and the peer-multiple methods all land well below it, several at a fraction of the quote. When asset value, earnings power, and peer multiples all say expensive and only the growth lens reaches the price, the market is paying a premium for compounding that has not yet been demonstrated over a full cycle.

What the price requires is concrete and demanding. The inversion shows the price needs roughly a 24% operating margin sustained for nearly fifteen years, against the 22.6% the company earns today. The margin assumption is close to what FTAI already does, so the bet is not on margin expansion; it is on duration and volume, that the CFM56 module ramp and the leasing book keep growing at this pace for well over a decade. The module production target of 1,050 units for the year is the tangible evidence behind the assumption, and whether it is met is the cleanest test of the thesis. The peer cohort of aerospace aftermarket and services companies like StandardAero and AAR is the right comparison, and within it FTAI's valuation is the most stretched, which is the market crediting its differentiated module model.

Solvency is where the bear and the valuation meet. FTAI carries net debt above $3 billion, leverage near 4.7 times trailing operating income, and interest coverage of only about 2.6 times, and the operating cash flow is consumed by the capital intensity of buying engines and aircraft. That is a leveraged balance sheet supporting a cyclical asset base, and it leaves little margin for error if the airline cycle softens. The decisive variable is not any single fair-value estimate but the durability of the module ramp and the airline demand behind it, weighed against a debt load that amplifies both the upside and the downside. The price assumes the ramp continues and the cycle cooperates.

Catalysts

FTAI reported first-quarter 2026 results in May, with total revenue of $830.7 million, up from $502.1 million a year earlier, driven mainly by higher CFM56 and V2500 engine and module sales and higher maintenance contract revenue. Net income rose to $137.9 million from $102.4 million, and diluted EPS increased to $1.29 from $0.87. Adjusted EBITDA climbed to $325.6 million, with the Aerospace Products segment's adjusted EBITDA up 70% to $222.6 million at a 30% margin.

The single most important operating metric was module production. Global CFM56 module output reached 270 units, roughly double the 138 produced a year earlier, and the company reiterated its full-year target of 1,050 modules. The pace of that ramp through the rest of the year is the catalyst most directly tied to the thesis, because the aftermarket growth depends on scaling module throughput.

FTAI reaffirmed its 2026 total business-segment EBITDA outlook of $1.625 billion, comprising $1.05 billion from aerospace products and $575 million from aviation leasing. The items to watch are the module-production trajectory against the 1,050 target, the expansion of maintenance capacity such as the Rome facility joint venture, and any shift in airline demand or interest rates that would affect both the leasing book and the debt load.

Peer Cohorts (Per Segment, With Filing Citations)

Aerospace Products (reported)

Aviation Leasing (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 results, May 2026 · 2026 guidance, May 2026 · Q1 2026 results release, May 2026

View the full interactive FTAI report on boothcheck