Why Ryanair (RYAAY) Stock Is Surging Today

NEW YORK (TheStreet) -- Shares of Ryanair Holdings (RYAAY) are up 4.94% to $55.92 after it was reported that it will make a nonbinding offer for a stake in Cyprus Airways on Friday as Europe's largest budget airline explores growth options, the Wall Street Journal reports.

Dublin-based Ryanair already has held several discussions with the government of Cyprus, which owns 93.7% of the carrier and is seeking investors, the Journal noted.

A decision on whether to make a binding offer would likely come early next year after a period of due diligence, Ryanair said.

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 compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

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

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Airlines industry. The net income increased by 165.2% when compared to the same quarter one year prior, rising from $101.61 million to $269.42 million.
  • The revenue growth significantly trails the industry average of 49.0%. Since the same quarter one year prior, revenues rose by 17.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Even though the current debt-to-equity ratio is 1.09, 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 1.77 is high and demonstrates strong liquidity.
  • 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. Compared to other companies in the Airlines industry and the overall market on the basis of return on equity, RYANAIR HOLDINGS PLC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • RYANAIR HOLDINGS PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RYANAIR HOLDINGS PLC reported lower earnings of $2.50 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($3.45 versus $2.50).
  • You can view the full analysis from the report here: RYAAY Ratings Report
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