Ryanair Holdings RYAAY has been benefiting from upbeat passenger volumes, fleet modernization techniquesand consistent shareholder-friendly initiatives. The positive sentiment surrounding RYAAY stock is evident from the fact that the Zacks Consensus Estimate for the fourth quarter of 2024 earnings has been revised upward in the past 90 days.

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The Zacks Consensus Estimate for fourth-quarter 2024 earnings per share indicates more than 100% growth from the respective 2023 figure.

Let’s delve deeper.

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 air-travel demand strength, 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 delivery delays.

Additionally, RYAAY reported impressive traffic numbers for November 2024. The number of passengers transported on Ryanair flights was 13 million in November 2024, reflecting an 11% year-over-year increase. The November load factor of 92% remained flat on a year-over-year basis, reflecting consistent passenger demand for the airline's services.  RYAAY operated more than 73,750 flights in November 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.

Apart from RYAAY, another airline company, Copa Holdings, S.A. CPA, reported traffic numbers for November 2024 on the back of upbeat air-travel demand. Driven by high passenger volumes, revenue passenger miles (a measure of traffic) improved on a year-over-year basis in November. To match the demand swell, CPA is increasing its capacity. In November, available seat miles (a measure of capacity) increased 8.4% year over year. Revenue passenger miles increased 6.8% year over year. Although traffic improved on a year-over-year basis, it failed to outpace capacity expansion. As a result, the load factor fell to 86.1% from 87.4% in November 2023.

Some Other Tailwinds Working in Favor of RYAAY Stock

We are also impressed with RYAAY’s solid balance sheet. The low-cost carrier ended second-quarter fiscal 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, long-term debt level has decreased to $1.85 billion at the end of second-quarter fiscal 2025 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

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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 have returned almost €9 billion (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.

Impressive Valuation Picture for RYAAY Stock

From a valuation perspective, RYAAY is trading at a discount compared to the industry, going by the forward 12-month price-to-earnings ratio. The reading is also below its median over the last three years. The company has a Value Score of A.

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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. In 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, which was in part due to Boeing delivery delays.

How Should Investors Approach RYAAY Stock?

It is understood that RYAAY stock is attractively valued, and upbeat passenger volumes are contributing to its top line. RYAAY’s measures to expand its fleet to cater to the rising travel demand 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 add RYAAY stock to their portfolios. 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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The Boeing Company (BA) : Free Stock Analysis Report

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Copa Holdings, S.A. (CPA) : Free Stock Analysis Report

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