NEW YORK ( TheStreet) -- Ryanair Holdings (Nasdaq: RYAAY) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Airlines industry and the overall market, RYANAIR HOLDINGS PLC's return on equity is below that of both the industry average and the S&P 500.
  • Even though the current debt-to-equity ratio is 1.24, 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 1.64 is high and demonstrates strong liquidity.
  • Net operating cash flow has increased to $820.42 million or 38.50% when compared to the same quarter last year. Despite an increase in cash flow, RYANAIR HOLDINGS PLC's average is still marginally south of the industry average growth rate of 42.10%.
  • 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 two years. We feel that this trend should continue. During the past fiscal year, RYANAIR HOLDINGS PLC increased its bottom line by earning $1.78 versus $1.39 in the prior year. This year, the market expects an improvement in earnings ($2.12 versus $1.78).
  • RYAAY's very impressive revenue growth greatly exceeded the industry average of 39.2%. Since the same quarter one year prior, revenues leaped by 76.6%. Growth in the company's revenue appears to have helped boost the earnings per share.

Ryanair Holdings plc, together with its subsidiaries, operates a low-fares scheduled passenger airline in Ireland. The company has a P/E ratio of 21.5, above the average transportation industry P/E ratio of 16.7 and above the S&P 500 P/E ratio of 17.7. Ryanair has a market cap of $8.9 billion and is part of the services sector and transportation industry. Shares are down 2.7% year to date as of the close of trading on Tuesday.

You can view the full Ryanair Ratings Report or get investment ideas from our investment research center.
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