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Here's Why Ryanair (RYAAY) is Down Since Q1 Earnings Release
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Ever since Ryanair Holdings’ (RYAAY - Free Report) first-quarter fiscal 2020 (ended Jun 30, 2019) earnings released on Jul 29, its shares have decreased 5.5%, despite the company reporting better-than-expected results.
The company’s earnings of $1.20 per share (€0.21) beat the Zacks Consensus Estimate of $1.14. However, the bottom line declined year over year due to low air fares and high costs. Meanwhile, revenues increased year over year to $2.6 billion (€2.3 billion), which was also marginally above the Zacks Consensus Estimate. The top line benefited from rise in traffic.
Results in Detail
Ryanair’s first-quarter fiscal 2020 profits saw a drop of 21% to €243 million on account of 6% fall in average air fares and 19% increase in costs (fuel costs jumped 24%). Unit costs excluding fuel rose 4% due to consolidation of the LaudaMotion unit and higher labor costs among other factors.
Meanwhile, traffic during the quarter ascended 11% to 42 million while load factor was flat at 96%. The carrier returned approximately €100 million to shareholders during the reported quarter.
As of Jun 30, 2019, capital expenditures totaled €389.6 million. Net debt at the end of the quarter was reduced to €419.3 million from €449.5 million as of Mar 31, 2019.
Fiscal 2020 Outlook
The company still anticipates fiscal 2020 profit after tax (PAT) to be flat year over year within €750-€950 million. Meanwhile, fares are expected to be approximately 6% lower in the second half of the year. Based on this, fiscal 2020 air fares are estimated to either decline up to 2% or increase up to 1%. Additionally, traffic is now predicted to increase 7% to more than 152 million, down from an 8% climb, anticipated previously. The downside is due to delivery delays from the Boeing MAX groundings. Fuel costs are anticipated to escalate by €450 million while non-fuel unit costs are expected to inch up 2%.
This overall disappointing performance and the bleak fiscal 2020 outlook caused the company’s shares to dive.
Shares of Delta, Gol Linhas and JetBlue have rallied more than 15%, 51% and 17%, respectively, so far this year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Here's Why Ryanair (RYAAY) is Down Since Q1 Earnings Release
Ever since Ryanair Holdings’ (RYAAY - Free Report) first-quarter fiscal 2020 (ended Jun 30, 2019) earnings released on Jul 29, its shares have decreased 5.5%, despite the company reporting better-than-expected results.
The company’s earnings of $1.20 per share (€0.21) beat the Zacks Consensus Estimate of $1.14. However, the bottom line declined year over year due to low air fares and high costs. Meanwhile, revenues increased year over year to $2.6 billion (€2.3 billion), which was also marginally above the Zacks Consensus Estimate. The top line benefited from rise in traffic.
Results in Detail
Ryanair’s first-quarter fiscal 2020 profits saw a drop of 21% to €243 million on account of 6% fall in average air fares and 19% increase in costs (fuel costs jumped 24%). Unit costs excluding fuel rose 4% due to consolidation of the LaudaMotion unit and higher labor costs among other factors.
Meanwhile, traffic during the quarter ascended 11% to 42 million while load factor was flat at 96%. The carrier returned approximately €100 million to shareholders during the reported quarter.
As of Jun 30, 2019, capital expenditures totaled €389.6 million. Net debt at the end of the quarter was reduced to €419.3 million from €449.5 million as of Mar 31, 2019.
Fiscal 2020 Outlook
The company still anticipates fiscal 2020 profit after tax (PAT) to be flat year over year within €750-€950 million. Meanwhile, fares are expected to be approximately 6% lower in the second half of the year. Based on this, fiscal 2020 air fares are estimated to either decline up to 2% or increase up to 1%. Additionally, traffic is now predicted to increase 7% to more than 152 million, down from an 8% climb, anticipated previously. The downside is due to delivery delays from the Boeing MAX groundings. Fuel costs are anticipated to escalate by €450 million while non-fuel unit costs are expected to inch up 2%.
This overall disappointing performance and the bleak fiscal 2020 outlook caused the company’s shares to dive.
Zacks Rank & Key Picks
Ryanair carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the same space are Delta Air Lines (DAL - Free Report) , Gol Linhas Aereas Inteligentes and JetBlue Airways Corporation (JBLU - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Delta, Gol Linhas and JetBlue have rallied more than 15%, 51% and 17%, respectively, so far this year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>