NEW YORK ( TheStreet) -- Ryanair Holdings (Nasdaq: RYAAY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and relatively poor performance when compared with the S&P 500 during the past year. Highlights from the ratings report include:
- Net operating cash flow has significantly decreased to -$269.77 million or 1120.71% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Airlines industry. The net income has decreased by 3.7% when compared to the same quarter one year ago, dropping from -$26.75 million to -$27.74 million.
- Even though the current debt-to-equity ratio is 1.11, it is still below the industry average, suggesting that this level of debt is acceptable within the Airlines industry. Despite the fact that RYAAY's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.95 is high and demonstrates strong liquidity.
- RYANAIR HOLDINGS PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, RYANAIR HOLDINGS PLC turned its bottom line around by earning $1.39 versus -$0.76 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.39).
- The revenue growth significantly trails the industry average of 42.7%. Since the same quarter one year prior, revenues rose by 11.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.