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Ryanair (RYAAY) Stock Declines 2.7% YTD: More Hurdles Ahead?

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·3 min read
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Ryanair Holdings plc’s RYAAY shares have declined 2.7% of value in the year-to-date period against the industry’s 14.1% increase.

Let’s discuss the reasons for this drab price performance and discuss what lies ahead for the company.

With renewed lockdowns in the U.K., Ireland and some other countries in the EU following the surge in coronavirus cases, Ryanair slashed its fiscal 2021 traffic forecast. The carrier expects fresh lockdowns and other travel-related restrictions to further affect travel demand. Notably, the carrier’s February traffic was merely 0.5 million, less than 1.3 million recorded in January 2021. The same is anticipated to be as low as 500,000 in March. With this, the airline estimates its fiscal 2021 traffic to be in the 26-30 million range compared with its earlier prediction of below 35 million.

Due to the coronavirus-induced low demand, the company’s fiscal 2020 profits were hurt by more than €40 million. The company incurred a loss of €731.3 million in the first nine months of fiscal 2021. Amid coronavirus-related uncertainties, Ryanair anticipates fiscal 2021 net loss (pre-exceptional items) to be between €850 million and €950 million.

However, Ryanair’s sound liquidity position is encouraging. At the end of the third quarter of fiscal 2021, the company’s cash and cash equivalents stood at $4,163 million, way higher than the current debt of $2,214 million. This indicates that the company has sufficient cash to meet its current debt obligations.

Zacks Rank & Stocks to Consider

Ryanair currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Transportation sector are Kansas City Southern KSU, FedEx Corporation FDX and Herc Holdings Inc. HRI. Kansas City and FedEx carry a Zacks Rank #2 (Buy), while Herc Holdings sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Kansas City, FedEx and Herc Holdings is pegged at 15%, 12% and 31.2%, respectively.

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