ASLE

AerSale is a lumpy, asset-heavy commercial-aviation aftermarket platform (Asset Management Solutions + TechOps) whose reported numbers pull in two directions. On the plus side, FY2025 profitability is recovering hard off the FY2023 trough: operating income +62% to $15.8M, net income +46.6% to $8.57M, diluted EPS +63.6% to $0.18, and gross margin held at 31.5%. Leverage is still modest (liabilities/equity 0.51x) and the shares screen cheap on assets — market cap $310M sits below stockholders' equity of $424M (~0.73x book) and P/S is under 1x. That book-value floor plus the ~11% share-count reduction (47.2M shares, -11.3% YoY) is the core reason to hold rather than sell.

The problem is quality and cash. Revenue is going nowhere — $340M (FY21), $409M (FY22), $335M (FY23), $345M (FY24), $335M (FY25) — i.e. flat-to-down over five years and -2.8% in FY2025, which is exactly what the MD&A's dependence on episodic whole-asset sales and disassembly-for-USM would predict. Returns are thin: 2.6% net margin, 4.7% operating margin, and just 2.0% ROE. At $6.57 that earns a 36.5x P/E — a rich multiple for a no-growth, cyclical, low-return business. Most tellingly, operating cash flow swung to -$23.0M (from positive, a -305% move) even as net income rose: earnings are being consumed by Flight Equipment inventory builds, not converted to cash. That build is being funded with debt — long-term debt jumped 175% to $111M — against a razor-thin $4.38M cash balance.