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Ryanair (RYAAY) Stock Slips to 52-Week Low on Labor Unrest
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Shares of Ryanair Holdings plc (RYAAY - Free Report) tumbled to a 52-week low of $94.50 on Aug 10. However, shares recovered to some extent to close the trading session at $96.77, down 2.8% from the closing price of Aug 9.
Worst One-Day Strike Throws Travel Haywire
Ryanair has been struggling with labor-related issues for quite some time. The situation took a turn for the worse with pilots in five European countries, including Sweden and Belgium, resorting to a 24-hour strike on Aug 10
The action by the pilots led to multiple flight cancellations hurting travel plans of approximately 55,000 passengers across Europe. Notably, the labor unrest comes at a most inappropriate time with the summer holiday season is at its peak in Europe. The pilots are looking for more transparency with regard to promotions and transfers, thus reducing undue management discretion.
We remind investors that on Jul 12, Ryanair’s pilots, based in Ireland, went on a 24-hour strike in protest against management’s approach toward transfers between the carrier’s European and African bases. This strike also resulted in multiple flight cancellations and hampered travel plans of many passengers.
Other Headwinds
Apart from the ongoing labor unrest, other headwinds have been hurting Ryanair. The carrier remains concerned about a Brexit-related impact with leisure and business travel demand taking a hit. The carrier fears that its UK shareholders will be treated as non-EU. We note that Mar 29, 2019 is the date for the UK to leave the EU.
Moreover, rising fuel costs are anticipated to limit bottom-line growth. Ryanair expects its fuel bill to rise by more than €400m in fiscal 2019 (ending Mar 31, 2019). This significant increase is expected to be a major drag on the company’s earnings.
In a year’s time, shares of this European low-cost carrier have underperformed the Zacks Airline industry. The stock has shed 17.4% of its value compared with the industry’s 10.3% decline.
One- Year Price Performance
Other Metrics
The Zacks Consensus Estimate for fiscal 2019 and 2020 earnings moved south 11.3% and 12.4%, respectively, in the last 60 days. This reflects investor’s pessimism surrounding the stock.
Furthermore, the stock has a VGM Score of C, which highlights its unattractiveness. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Such a score allows investors to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.
Undoubtedly, the above negatives substantiate the company’s Zacks Rank #5 (Strong Sell).
Shares of Trinity, CSX and Norfolk Southern have rallied more than 31%, 42% and 43%, respectively, in a year.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Ryanair (RYAAY) Stock Slips to 52-Week Low on Labor Unrest
Shares of Ryanair Holdings plc (RYAAY - Free Report) tumbled to a 52-week low of $94.50 on Aug 10. However, shares recovered to some extent to close the trading session at $96.77, down 2.8% from the closing price of Aug 9.
Worst One-Day Strike Throws Travel Haywire
Ryanair has been struggling with labor-related issues for quite some time. The situation took a turn for the worse with pilots in five European countries, including Sweden and Belgium, resorting to a 24-hour strike on Aug 10
The action by the pilots led to multiple flight cancellations hurting travel plans of approximately 55,000 passengers across Europe. Notably, the labor unrest comes at a most inappropriate time with the summer holiday season is at its peak in Europe. The pilots are looking for more transparency with regard to promotions and transfers, thus reducing undue management discretion.
We remind investors that on Jul 12, Ryanair’s pilots, based in Ireland, went on a 24-hour strike in protest against management’s approach toward transfers between the carrier’s European and African bases. This strike also resulted in multiple flight cancellations and hampered travel plans of many passengers.
Other Headwinds
Apart from the ongoing labor unrest, other headwinds have been hurting Ryanair. The carrier remains concerned about a Brexit-related impact with leisure and business travel demand taking a hit. The carrier fears that its UK shareholders will be treated as non-EU. We note that Mar 29, 2019 is the date for the UK to leave the EU.
Moreover, rising fuel costs are anticipated to limit bottom-line growth. Ryanair expects its fuel bill to rise by more than €400m in fiscal 2019 (ending Mar 31, 2019). This significant increase is expected to be a major drag on the company’s earnings.
In a year’s time, shares of this European low-cost carrier have underperformed the Zacks Airline industry. The stock has shed 17.4% of its value compared with the industry’s 10.3% decline.
One- Year Price Performance
Other Metrics
The Zacks Consensus Estimate for fiscal 2019 and 2020 earnings moved south 11.3% and 12.4%, respectively, in the last 60 days. This reflects investor’s pessimism surrounding the stock.
Furthermore, the stock has a VGM Score of C, which highlights its unattractiveness. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Such a score allows investors to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.
Undoubtedly, the above negatives substantiate the company’s Zacks Rank #5 (Strong Sell).
Stocks to Consider
Some better-ranked stocks in the broader Transportation sector includeTrinity Industries, Inc. (TRN - Free Report) , CSX Corporation (CSX - Free Report) and Norfolk Southern Corporation (NSC - 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 Trinity, CSX and Norfolk Southern have rallied more than 31%, 42% and 43%, respectively, in a year.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>