Avation (LSE:AVAP) Stock Price Trails FY Results As NAV Gap Draws Focus

Avation came into this earnings print with the stock at £1.405, a modest gain over the past three months, and a reputation as a recovering aircraft lessor trading on a discounted P/E around 13x. The full year 2026 numbers put hard figures behind that recovery, with profit after tax of US$8.4m and net asset value per share around £3.33, well above the current price. That gap between the market quote and the balance sheet value, rather than the headline earnings per share, is the key factor investors appear to be focusing on today.

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FY 2026 Earnings Summary

• Revenue (FY 2026 vs. FY 2025): US$110.1m vs. US$110.1m (broadly flat over the year)
• Net Income (Excl. Extra Items, FY 2026 vs. FY 2025): profit of US$8.4m vs. loss of US$7.7m (swing back into profitability)
• Basic EPS (FY 2026 vs. FY 2025): US$0.13 vs. loss of US$0.11 per share (earnings moved from negative to positive)
• EBITDA/Interest Coverage Ratio (FY 2026 vs. FY 2025): 2.5x vs. prior year level not specified (interest costs covered but with a relatively thin buffer)

Ask Charlie what makes Avation so confident in ATR growth.

Avation bull case: ATR growth and cleaner balance sheet tested

Optimists argue that Avation has the building blocks for a higher quality, more resilient leasing platform built around ATRs and less fragile funding.

"Tight aircraft supply and strong demand for leased planes give Avation pricing power on future contracts, which can support lease revenue and potentially lift overall earnings."

FY 2026 results partly line up with that story. Profit after tax of US$8.4m confirms a move back into the black, and utilization stayed strong enough to keep revenue broadly flat. Yet lease yield slipped from 11.3% to 10.7%, which undercuts the idea of clear pricing power even as ATR deliveries and the Cabo Verde placement show the turboprop pipeline is active.

Avation bear case: yield pressure, cash flow strain under the microscope

Critics worry that softer pricing and weaker cash generation will choke the balance sheet recovery and make buybacks harder to sustain.

"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."

The latest year gives this concern real weight. Operating cash flow is currently US$31m while capex, share repurchases and bond buybacks together exceeded US$75m. NAV per share rose and EPS turned positive, but that uplift leaned on non rent items and capital actions, so the sustainability test now shifts squarely to future cash flows.

That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for.

Hunt For Balance Sheet Gaps

Avation now has fresh numbers that put its balance sheet and cash flows under sharper scrutiny. The real opportunity could be spotting stocks that look mispriced before stronger fundamentals filter through.

• Company 1 - 32% below our estimate - targets longer defence programmes as militaries fund underwater surveillance and autonomous systems platform upgrades.
• Company 2 - 38% below our estimate - expands robotic surgery offerings and new implant ranges as surgeons adopt faster procedures and consumables.
• Company 3 - 24% below our estimate - advances copper projects and permitting so capacity can ramp when new pits and underground development progress.

Those are three of them. See all 6 potentially undervalued companies →

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