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Ryanair (RYAAY) Stock Down 24.3% in a Year's Time: Here's Why
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Shares of Ryanair Holdings (RYAAY - Free Report) have been displaying a downtrend on the bourses for a while now, declining 24.3% in a year’s time, better than its industry’s 28.6% fall.
Image Source: Zacks Investment Research
Let’s delve into the reasons for this unimpressive price performance and examine if the stock’s fortunes will rise going forward.
Despite improvement, air-travel demand in the European Union continues to be below the pre-pandemic levels. The carrier’s February traffic of 8.7 million, though well above the year-ago levels, was below the comparable figure of 2019. The spike in coronavirus cases in Europe due to the omicron variant contributed to this weakness.
Per Ryanair CEO Michael O'Leary, net loss at RYAAY for fiscal 2022 (ended Mar 31) is likely to be in the middle of the forecast range of €250-€450 million. Moreover, RYAAY’s operating expenses are escalating, primarily due to increase in fuel and oil costs, and airport and handling charges. In the first nine months of fiscal 2022, the carrier’s operating expenses surged 87% year over year to €3,792 million.
With oil prices surging, operating expenses will continue to be steep. This is likely to dent bottom-line growth at RYAAY, currently carrying a Zacks Rank #3 (Hold). However, on a brighter note, O'Leary believes, RYAAY’s performance might be better in fiscal 2023. This, however, depends on the pickup in air traffic and air fares. The CEO believes that pre-pandemic profits of 1.5 billion euros might be achieved in fiscal 2023. He was quoted saying: "There's a chance but it all depends on pricing”.
However, following the resurgence of new coronavirus cases recently in some parts of the world, investors will now wait and see if this spreads to Europe and hurts Ryanair’s improving traffic scenario. Disruptions due to the Russia-Ukraine war may also affect the air-traffic pickup.
Some better-ranked stocks within the broader Transportation sector are as follows:
USA Truck currently sports a Zacks Rank #1 (Strong Buy). USAK’s earnings surpassed the Zacks Consensus Estimate in three of the preceding four quarters (in line in one), the average surprise being 64.4%.
Shares of USA Truck have rallied more than 35% in the past six months. Improving freight conditions are aiding USAK.
GATX Corporation (GATX - Free Report) currently carries a Zacks Rank #2 (Buy). GATX has an impressive surprise history, with its earnings having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average being 27.7%.
Shares of GATX have also appreciated more than 33% in the past six months. Efforts to reward its shareholders through dividends and buybacks are very encouraging.
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Ryanair (RYAAY) Stock Down 24.3% in a Year's Time: Here's Why
Shares of Ryanair Holdings (RYAAY - Free Report) have been displaying a downtrend on the bourses for a while now, declining 24.3% in a year’s time, better than its industry’s 28.6% fall.
Image Source: Zacks Investment Research
Let’s delve into the reasons for this unimpressive price performance and examine if the stock’s fortunes will rise going forward.
Despite improvement, air-travel demand in the European Union continues to be below the pre-pandemic levels. The carrier’s February traffic of 8.7 million, though well above the year-ago levels, was below the comparable figure of 2019. The spike in coronavirus cases in Europe due to the omicron variant contributed to this weakness.
Per Ryanair CEO Michael O'Leary, net loss at RYAAY for fiscal 2022 (ended Mar 31) is likely to be in the middle of the forecast range of €250-€450 million. Moreover, RYAAY’s operating expenses are escalating, primarily due to increase in fuel and oil costs, and airport and handling charges. In the first nine months of fiscal 2022, the carrier’s operating expenses surged 87% year over year to €3,792 million.
You can see the complete list of today’s Zacks #1 Rank stocks here.
With oil prices surging, operating expenses will continue to be steep. This is likely to dent bottom-line growth at RYAAY, currently carrying a Zacks Rank #3 (Hold). However, on a brighter note, O'Leary believes, RYAAY’s performance might be better in fiscal 2023. This, however, depends on the pickup in air traffic and air fares. The CEO believes that pre-pandemic profits of 1.5 billion euros might be achieved in fiscal 2023. He was quoted saying: "There's a chance but it all depends on pricing”.
However, following the resurgence of new coronavirus cases recently in some parts of the world, investors will now wait and see if this spreads to Europe and hurts Ryanair’s improving traffic scenario. Disruptions due to the Russia-Ukraine war may also affect the air-traffic pickup.
Some better-ranked stocks within the broader Transportation sector are as follows:
USA Truck currently sports a Zacks Rank #1 (Strong Buy). USAK’s earnings surpassed the Zacks Consensus Estimate in three of the preceding four quarters (in line in one), the average surprise being 64.4%.
Shares of USA Truck have rallied more than 35% in the past six months. Improving freight conditions are aiding USAK.
GATX Corporation (GATX - Free Report) currently carries a Zacks Rank #2 (Buy). GATX has an impressive surprise history, with its earnings having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average being 27.7%.
Shares of GATX have also appreciated more than 33% in the past six months. Efforts to reward its shareholders through dividends and buybacks are very encouraging.