Avation just put a full year of profit on the table for FY 2026, yet the share price closed almost exactly where it started at £1.405. That muted move jars with a lessor that booked profit after tax of $8.4m and lifted net asset value per share to $4.39. The market seems fixated on the financial risk flag around interest coverage, while the earnings print points to a cleaner balance sheet story and higher dividend. This is a sentiment face off between fear of leverage and the pull of tangible equity value.
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FY 2026 Earnings Summary
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Total Revenue (FY 2026):US$110.09m vs. US$110.10m in FY 2025 (broadly flat year on year)
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Net Income (Excl. Extra Items, FY 2026):profit of US$8.42m vs. loss of US$7.72m in FY 2025 (swing back into profitability)
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Basic EPS (FY 2026):US$0.13 vs. loss of US$0.11 per share in FY 2025 (return to positive earnings per share)
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Earnings From Continuing Operations (FY 2026):profit of US$8.42m vs. loss of US$7.72m in FY 2025 (improved ongoing profitability)
Skip the headline profit bounce. Ask Charlie what Avation's ATR orderbook really signals .
Avation bull case: orderbook and buybacks on trial
The optimistic view hinges on Avation converting tight aircraft supply, ATR demand and capital returns into sturdier earnings power.
"Ongoing share buybacks funded alongside contracted capex, including the repurchase of more than 10% of equity and an increase in net asset value per share to US$4.39 in FY 2026, mean that if earnings remain steady or grow, earnings per share and return on equity can rise faster than headline profit."
FY 2026 profit of US$8.4m, NAV per share at US$4.39 and more than 10% of equity retired show this playbook is being executed, with ATR deliveries placed quickly and contracted revenues of US$303m reinforcing that balance sheet driven story.
Stress testing Avation bear case on yields and cash
The sceptical argument says weakening yields and softer cash generation will cap how far this recovery can run.
"If operating cash flow remains around levels such as the recent US$31 million instead of returning toward prior levels like US$91 million, the company could have less internal funding for capex and buybacks, which would limit support for earnings and earnings per share."
Lease yields reported at 10.7% reflect IFRS 16 effects on the A330 more than clear pricing erosion, and Avation still funded ATR deliveries, share repurchases above 10% of equity and loan repayments of US$76m, which indicates current cash generation is supporting both growth and capital returns for now.
One Narrative disagrees with today's price. → See where this Narrative says Avation should trade .
Hunt Quiet Disconnects Before Crowds
Avation just showed how a clean earnings story can sit alongside a flat share price. The real opportunity is spotting stocks that could be undervalued before fresh information forces investors to rethink.
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Company 1 - 33% below our estimate - channels fee revenue into real asset platforms focused on tax-efficient retail inflows.
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Company 2 - 32% below our estimate - builds maritime sensors and uncrewed systems aligned with longer defence contracts for underwater protection.
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Company 3 - 26% below our estimate - secures multi decade defence programmes backed by expanded modernization budgets and long-lead technology orders.
Those are three of them. See every one of the 6 undervalued companies on it →
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.
Companies discussed in this article include AVAP.L .
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