Why Ryanair (RYAAY) Stock Is Flying High Today

NEW YORK (TheStreet) -- Shares of Ryanair Holdings Plc (RYAAY) are surging, up 7.08% to $54.59, after CEO Michael O'Leary forecast a return to growth this year after the first profit decline in five years, as Europe's biggest discount airline chases business passengers in a bid to fly almost 3 million more people, Blkoomberg reports.

O'Leary plans to increase fares and improve upon the no frills approach while being more customer friendly.

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The airline's profit after tax for the year through March 2015 will likely be 580 million euros, or $795 million, to 620 million euros, an increase of about 19%, the company said today.

After-tax earnings slid 8% last year to 523 million euros.

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 PLC (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 and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth significantly trails the industry average of 38.4%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.95, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, RYAAY has a quick ratio of 1.91, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Airlines industry and the overall market, RYANAIR HOLDINGS PLC's return on equity exceeds that of both the industry average and the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • RYANAIR HOLDINGS PLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. Despite the past stability of earnings, the consensus estimate anticipates a weakening in earnings. During the past fiscal year, RYANAIR HOLDINGS PLC's EPS of $2.52 remained unchanged from the prior years' EPS of $2.52. For the next year, the market is expecting a contraction of 2.8% in earnings ($2.45 versus $2.52).
  • You can view the full analysis from the report here: RYAAY Ratings Report

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