What's Behind Ryanair Holdings' (RYAAY) Double-Digit Selloff?

NEW YORK (TheStreet) -- Ryanair Holdings (RYAAY) reported first-half 2014 earnings and downwardly revised its full-year guidance, sending shares down 14.2% to $43.21 as of 10 a.m. EDT. This marks the first time in five years annual profit is expected to fall.

The budget airline said full-year 2014 net profit will be in the range of 500 million to 520 million euros ($675 million to $702 million), lower than 570 million to 600 million euros previously forecast. For full-year 2013, the company earned 569 million euros. A lower fare environment is responsible for the weak outlook, said the company.

"Market pricing remains weak, so we will continue to promote low-fare seat sales throughout the remainder of both 3Q and 4Q," said CEO Michael O'Leary in a statement. "Based on reasonable visibility, we expect 3Q fares to fall by 9% and 4Q (albeit with zero visibility) to fall by up to 10% (without the benefit of Easter which will be in 1Q FY15."

The Dublin-based airline reported first-half 2014 profit up 1% from the year-ago period to 602 million euros, in line with analyst expectations, and revenue 5% higher to 3.26 billion euros. Earnings of 42.04 euro cents a share was 2% higher than 41.34 euro cents a year earlier.

TheStreet Ratings team rates Ryanair Holdings PLC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate Ryanair Holdings (RYAAY) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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