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Ryanair Stock Plunges 17.7% YTD: Should You Buy the Dip?
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Shares of Ryanair Holdings (RYAAY - Free Report) have not had a good time on the bourses of late, declining in double-digits so far this year. The disappointing price performance resulted in RYAAY underperforming its industry in the said time frame. Additionally, RYAAY’s price performance is unfavorable to that of other airline operators like Alaska Air Group, Inc. (ALK - Free Report) and Southwest Airlines Co. (LUV - Free Report) in the same timeframe.
YTD Price Comparison
Image Source: Zacks Investment Research
Given the significant pullback in RYAAY’s shares currently, investors might be tempted to snap up the stock. But is this the right time to buy RYAAY? Let’s find out.
Upbeat Air Travel Demand: A Major Tailwind
Passenger volume has been robust at Ryanair over the past few months owing to the rebound in air-traffic from COVID-19 lows. Driven by the strength of air travel demand, RYAAY's traffic grew 9% year over year during fiscal 2024. During the first half of fiscal 2025, traffic grew 9% year over year, despite multiple Boeing (BA - Free Report) delivery delays.
Additionally, RYAAY reported impressive traffic numbers for October 2024. The number of passengers transported on Ryanair flights was 18.3 million in October 2024, reflecting a 7% year-over-year increase. The October load factor (percentage of seats filled by passengers) of 93% remained flat on a year-over-year basis, reflecting consistent passenger demand for the airline's services. RYAAY operated more than 103,200 flights in October 2024.
To meet the upbeat demand, Ryanair expects its traffic view to grow 8% on a year-over-year basis for fiscal 2025, subject to no worsening of current Boeing delivery delays.
Some Other Tailwinds Working in Favor of RYAAY Stock
We are impressed with RYAAY’s solid balance sheet. The low-cost carrier ended fiscal second-quarter 2025 with cash and cash equivalents of $3.73 billion, much higher than the current debt level of $982 million. This implies that the company has sufficient cash to meet its current debt obligations. Meanwhile, the long-term debt level decreased to $1.85 billion at the fiscal second quarter of 2025-end from $2.80 billion at second-quarter fiscal 2024-end.
RYAAY’s second-quarter fiscal 2025 long-term debt translates into a debt-to-capitalization of 25% which is well below the sub-industry’s 64.1%.
Long-Term Debt to Capitalization
Image Source: Zacks Investment Research
A strong balance enables the company to reward its shareholders with dividend payments and share repurchases. Restarted in May, RYAAY has completed €700m share buyback in August 2024. RYAAY expects the €800m follow-on program to be completed by mid-2025. On completion, Ryanair will return almost €9billion (including dividends) to shareholders since 2008, with approximately 36% of the issued share capital repurchased.
A final dividend of €0.178 per share was paid in September 2024. Concurrent with RYAAY’s second-quarter fiscal 2025 (ended Sept. 30, 2024) earnings release, the company’s board (in line with its dividend policy) has declared an interim dividend of €0.223 per share to be paid in late February 2025.
Given the tailwinds surrounding the stock, earnings estimates have been northbound, as shown below.
Image Source: Zacks Investment Research
Rising Expenses Weigh on RYAAY Stock
Escalating operating expenses due to high fuel costs, staff costs and higher air traffic control fees are hurting Ryanair’s bottom line. During fiscal 2024, total operating costs grew 24% year over year, owing 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 delivery delays. During the first half of fiscal 2025, operating costs grew 8% year over year, owing to higher staff and other costs, partly due to Boeing delivery delays.
How Should Investors Approach RYAAY Stock?
It is clearly understood that upbeat passenger volumes are contributing to RYAAY’s top line. RYAAY’s measures to expand its fleet to cater to the rising travel demand also look encouraging.
We believe the positives surrounding the stock (highlighted throughout the write-up) outweigh the concerns about Boeing delivery delays and escalated operating expenses. We, therefore, suggest investors to buy the dip in RYAAY stock. The company’s Zacks Rank #2 (Buy) supports our thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Ryanair Stock Plunges 17.7% YTD: Should You Buy the Dip?
Shares of Ryanair Holdings (RYAAY - Free Report) have not had a good time on the bourses of late, declining in double-digits so far this year. The disappointing price performance resulted in RYAAY underperforming its industry in the said time frame. Additionally, RYAAY’s price performance is unfavorable to that of other airline operators like Alaska Air Group, Inc. (ALK - Free Report) and Southwest Airlines Co. (LUV - Free Report) in the same timeframe.
YTD Price Comparison
Given the significant pullback in RYAAY’s shares currently, investors might be tempted to snap up the stock. But is this the right time to buy RYAAY? Let’s find out.
Upbeat Air Travel Demand: A Major Tailwind
Passenger volume has been robust at Ryanair over the past few months owing to the rebound in air-traffic from COVID-19 lows. Driven by the strength of air travel demand, RYAAY's traffic grew 9% year over year during fiscal 2024. During the first half of fiscal 2025, traffic grew 9% year over year, despite multiple Boeing (BA - Free Report) delivery delays.
Additionally, RYAAY reported impressive traffic numbers for October 2024. The number of passengers transported on Ryanair flights was 18.3 million in October 2024, reflecting a 7% year-over-year increase. The October load factor (percentage of seats filled by passengers) of 93% remained flat on a year-over-year basis, reflecting consistent passenger demand for the airline's services. RYAAY operated more than 103,200 flights in October 2024.
To meet the upbeat demand, Ryanair expects its traffic view to grow 8% on a year-over-year basis for fiscal 2025, subject to no worsening of current Boeing delivery delays.
Some Other Tailwinds Working in Favor of RYAAY Stock
We are impressed with RYAAY’s solid balance sheet. The low-cost carrier ended fiscal second-quarter 2025 with cash and cash equivalents of $3.73 billion, much higher than the current debt level of $982 million. This implies that the company has sufficient cash to meet its current debt obligations. Meanwhile, the long-term debt level decreased to $1.85 billion at the fiscal second quarter of 2025-end from $2.80 billion at second-quarter fiscal 2024-end.
RYAAY’s second-quarter fiscal 2025 long-term debt translates into a debt-to-capitalization of 25% which is well below the sub-industry’s 64.1%.
Long-Term Debt to Capitalization
A strong balance enables the company to reward its shareholders with dividend payments and share repurchases. Restarted in May, RYAAY has completed €700m share buyback in August 2024. RYAAY expects the €800m follow-on program to be completed by mid-2025. On completion, Ryanair will return almost €9billion (including dividends) to shareholders since 2008, with approximately 36% of the issued share capital repurchased.
A final dividend of €0.178 per share was paid in September 2024. Concurrent with RYAAY’s second-quarter fiscal 2025 (ended Sept. 30, 2024) earnings release, the company’s board (in line with its dividend policy) has declared an interim dividend of €0.223 per share to be paid in late February 2025.
Given the tailwinds surrounding the stock, earnings estimates have been northbound, as shown below.
Image Source: Zacks Investment Research
Rising Expenses Weigh on RYAAY Stock
Escalating operating expenses due to high fuel costs, staff costs and higher air traffic control fees are hurting Ryanair’s bottom line. During fiscal 2024, total operating costs grew 24% year over year, owing 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 delivery delays. During the first half of fiscal 2025, operating costs grew 8% year over year, owing to higher staff and other costs, partly due to Boeing delivery delays.
How Should Investors Approach RYAAY Stock?
It is clearly understood that upbeat passenger volumes are contributing to RYAAY’s top line. RYAAY’s measures to expand its fleet to cater to the rising travel demand also look encouraging.
We believe the positives surrounding the stock (highlighted throughout the write-up) outweigh the concerns about Boeing delivery delays and escalated operating expenses. We, therefore, suggest investors to buy the dip in RYAAY stock. The company’s Zacks Rank #2 (Buy) supports our thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.