Shares of Ryanair Holdings RYAAY decreased 3.3% on Jan 18 to $65.75, following the company’s decision to lower its profitability view for fiscal 2019 (ending Mar 31, 2019). Per this Irish low-cost carrier, the decision can be primarily attributed to lower-than-expected air fares for the second half of the fiscal year.
In fact, Ryanair has struggled for quite some time. This is evident from the fact that the stock has shed 45.6% of its value in a year’s time. Factors like labor unrest and high costs have prevented the stock from gaining altitude.
Ryanair’s decision to trim its fiscal 2019 earnings view is an added setback to the already struggling stock.
Anticipating weak winter air fares, Ryanair expects profit after tax (PAT) between €1 billion and €1.1 billion. The earlier projection had called for the metric to be in the €1.1-€1.2 billion range. Winter fares are anticipated to decline 7% year over year compared with the earlier projection of a 2% decrease.
The guidance, however, excludes data from the LaudaMotion unit, which was acquired by Ryanair in calendar 2018. Start up losses from the unit are expected to be €140 million in fiscal 2019.
Nonetheless, the carrier is optimistic about traffic and costs.. For fiscal 2019, traffic is expected to increase 9% to 142 million compared with the earlier projection of 141 million. Also, Ryanair expects to perform better on the unit cost front in the second half of the fiscal year.
The company said that it might lower its fiscal 2019 profit forecast further in the event of “unexpected Brexit or security developments which adversely impact yields between now and the end of March”. Updates regarding which will be available on Feb 4, when Ryanair is scheduled to release its third-quarter fiscal 2019 results.
Zacks Rank & Key Picks
Ryanair has a Zacks Rank #3 (Hold). A few better-ranked stocks in the Zacks Airline industry are Spirit Airlines SAVE, Azul S.A. AZUL and Allegiant Travel Company ALGT. While Spirit Airlines and Azul sport a Zacks Rank #1 (Strong Buy), Allegiant carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Spirit Airlines and Azul have gained 42.5% and 49.6%, respectively, in the past six months.Meanwhile, Allegiant boasts an impressive earnings history. Allegiant outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 18.7%.
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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
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