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Here's Why Investors Should Avoid Ryanair (RYAAY) Stock Now
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Ryanair (RYAAY - Free Report) faces financial instability due to high operating expenses and low liquidity. The strain on the company's bottom line is exacerbated by elevated labor and fuel costs. Additionally, low liquidity impedes its ability to meet obligations, making it a less appealing option for investors' portfolios.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 6% downward over the past 90 days. For the current year, the consensus mark for earnings has moved 12.5% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: RYAAY currently carries a Zacks Rank #5 (Strong Sell).
Poor Price Performance: Ryanair shares have declined 23% year to date against its industry’s 11.4% rise.
Image Source: Zacks Investment Research
Unimpressive Earnings Surprise History: The company has a discouraging track record with respect to the earnings surprise, having missed the Zacks Consensus Estimate in each of the trailing four quarters. The average miss is 30%.
Bearish Industry Rank: The industry to which Ryanair belongs currently has a Zacks Industry Rank of 225 (out of 251). Such an unfavorable rank places it in the bottom 10% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Other Headwinds: The northward movement in operating expenses is adversely impacting Ryanair’sbottom line. This surge in operating expenses is primarily driven by the increase in labor costs and fuel.
During fiscal 2024 (ended Mar 31, 2024), total operating costs grew 24% year over year due to a 32% increase in fuel costs, higher staff costs (including pay restoration, crew, engineering & handler pay rises, higher crewing ratios and pilot productivity pay) and Boeing (BA) delivery delays. In the first quarter of fiscal 2025, operating costs grew 11% year over year due to higher staff and other costs, which was in part due to Boeing delivery delays.
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.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Kirby Corporation (KEX - Free Report) .
The company 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 7.3%. Shares of CHRW have risen 6% in the past year.
KEX holds a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 40% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 8.7%. Shares of Kirby have climbed 49% in the past year.
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Here's Why Investors Should Avoid Ryanair (RYAAY) Stock Now
Ryanair (RYAAY - Free Report) faces financial instability due to high operating expenses and low liquidity. The strain on the company's bottom line is exacerbated by elevated labor and fuel costs. Additionally, low liquidity impedes its ability to meet obligations, making it a less appealing option for investors' portfolios.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 6% downward over the past 90 days. For the current year, the consensus mark for earnings has moved 12.5% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: RYAAY currently carries a Zacks Rank #5 (Strong Sell).
Poor Price Performance: Ryanair shares have declined 23% year to date against its industry’s 11.4% rise.
Image Source: Zacks Investment Research
Unimpressive Earnings Surprise History: The company has a discouraging track record with respect to the earnings surprise, having missed the Zacks Consensus Estimate in each of the trailing four quarters. The average miss is 30%.
Bearish Industry Rank: The industry to which Ryanair belongs currently has a Zacks Industry Rank of 225 (out of 251). Such an unfavorable rank places it in the bottom 10% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Other Headwinds: The northward movement in operating expenses is adversely impacting Ryanair’sbottom line. This surge in operating expenses is primarily driven by the increase in labor costs and fuel.
During fiscal 2024 (ended Mar 31, 2024), total operating costs grew 24% year over year due to a 32% increase in fuel costs, higher staff costs (including pay restoration, crew, engineering & handler pay rises, higher crewing ratios and pilot productivity pay) and Boeing (BA) delivery delays. In the first quarter of fiscal 2025, operating costs grew 11% year over year due to higher staff and other costs, which was in part due to Boeing delivery delays.
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.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Kirby Corporation (KEX - Free Report) .
C.H. Robinson Worldwide currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. CHRW has an expected earnings growth rate of 25.5% for the current year.
The company 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 7.3%. Shares of CHRW have risen 6% in the past year.
KEX holds a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 40% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 8.7%. Shares of Kirby have climbed 49% in the past year.