Ryanair stock analysis. RYAAY stock.
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Ryanair is a low-cost airline that serves short-haul routes across Europe and North Africa.
While Ryanair isn’t known for quality, it is cheap and cheap is what many customers look for when travelling.
This has helped the company to grow revenues from 5 billion euros in 2014 to almost 11 billion over the last 12 months. The business is profitable too.
Except for two years around Covid, the company has had impressive operating margins between 13 and 24%. And it’s been able to derive a third of its revenues from ancillary services like in-flight food and drink.
At the current share price, Ryanair has a market cap of 19.5 billion euros. With 4.7 billion of cash and 2.9 billion of long term debt the enterprise value is 17.7 billion.
Free cash flow over the last 12 months was 2 billion and net income was 1.3 billion so the stock is valued at 1.6 times revenue, 9 times free cash flow and just under 15 times earnings.
Looking at the chart you can see the stock is up 40% so far this year thanks to record travel numbers and a 30% drop in the oil price.
However, shares are still below their 2021 peak and that has a lot to do with increasing labor costs. According to Moody’s, airline labour costs will increase 19% this year and another 8% in 2024.
This will no doubt impact Ryanair’s earnings. Looking at the revenue mix below you can see that staff costs make up at least 11% of revenue while fuel and oil costs make up 37%.
Despite this, Ryanair has big plans for the future. It has ordered another 300 jets from Boeing and plans to hire another 10,000 people.
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