Yahoo Finance Here's Why You Should Retain Ryanair (RYAAY) Stock Now
Ryanair Holdings’ RYAAY robust passenger volumes, driven by upbeat air travel demand, are boosting its top line. The company’s efforts to upgrade its fleet are commendable. However, RYAAY is grappling with high operating expenses driven by rising fuel costs, which are adversely impacting its bottom line.
Factors Favoring RYAAY
Ryanair's passenger volumes have surged over the past few months, driven by a strong rebound in air traffic from the COVID-19 lows. In fiscal 2024, traffic grew by 9% year over year. For fiscal 2025, Ryanair anticipates an 8% increase in traffic, contingent on Boeing delivering aircraft at contracted levels by year-end.
In response to steadily improving air travel demand, RYAAY is expanding its network and plans to grow its fleet accordingly. The company had placed an additional order of 75 Boeing 737 MAX jets as it expects these fuel-efficient MAX jets to generate substantial growth.By the end of the third quarter of fiscal 2024, RYAAY took delivery of 136 B737 Gamechangers and expects to have up to 174 of these planes in its fleet by late June.
Shares of RYAAY have risen 11.4% over the past year compared with its industry’s growth of 5% in the same time period.
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Key Risks
High operating expenses, driven by a rise in fuel costs, staff costs and higher air traffic control fees, pose a threat to RYAAY's bottom line. In fiscal 2024, total operating expenses grew 24% year over year due to a 32% increase in fuel and oil costs due to war tensions.
Ryanair’s current ratio (a measure of liquidity) stood at 0.91 at the end of the fourth quarter of fiscal 2024, raising liquidity concerns. A current ratio of less than 1 indicates that the company does not have enough cash to meet its short-term obligations.
Moreover, events like the anti-trust inquiry, which was faced by Ryanair, along with Wizz Air and easyJet over price-fixing allegations for flights to and from Sicily, are not welcome. This could harm consumer confidence in the company.
Zacks Rank
RYAAY currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks from the Zacks Transportation sector are Wabtec Corporation WAB and Kirby Corporation KEX.
Wabtec currently sports a Zacks Rank #1 (Strong Buy) and has an expected earnings growth rate of 22.6% for the current year. You can see the complete list of today’s Zacks #1 Rank stocks here.
WAB has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 11.5%. Shares of Wabtec have surged 64.5% in the past year.
KEX currently sports a Zacks Rank #1 and has an expected earnings growth rate of 42.2% for the current year.
The company has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 10.3%. Shares of Kirby have surged 60.4% in the past year.
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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
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