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Ryanair Holdings (RYAAY) Down 7.1% in 6 Months: Here’s Why


Shares of Ryanair Holdings plc RYAAY have lost 7.1% in the past six months, underperforming its industry’s decline of 2.9%.

Reasons Behind the Price Plunge

This European carrier has been suffering from the dispute with its pilots for quite some time. Recently, the Spanish pilots' union had called off talks with the carrier. Also, the union might file a lawsuit against the company going forward.

In 2017, the European Employee Representative Council — formed by pilots of the Irish carrier — had demanded the resignation of Ryanair CEO, Michael O‘Leary. Per the unofficial pan-European body, O‘Leary had failed to tackle the issue effectively, resulting in many pilots quitting the company. Ryanair, however, dismissed this demand. This Irish low-cost carrierhad to cancel 2,000 flights due to shortage of pilots. Also, Ryanair’s pilots had resorted to a four-hour strike last year in protest.

Apart from the dispute with pilots, the lack of clarity regarding Brexit represents a further challenge for the company. Fares are expected to remain under pressure due to the uncertain scenario.

Moreover, rising fuel costs are anticipated to limit bottom-line growth. Ryanair expects its fuel bill to rise by more than €300m in fiscal 2019 (ending Mar 31, 2019). This significant increase is expected to be a major drag on the company’s earnings.

Other Metrics

The Zacks Consensus Estimate for fiscal 2018 and 2019 earnings moved south 1.2% and 7.1%, respectively, in the last 30 days. This reflects investor’s pessimism surrounding the stock.

Furthermore, the stock has a VGM Score of D, 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 #4 (Sell).

Stocks to Consider

Some better-ranked stocks in the broader Transportation sector are GATX Corporation GATX, Expeditors International of Washington, Inc. EXPD and SkyWest, Inc. SKYW. While GATX carries a Zacks Rank #2 (Buy), Expeditors and SkyWest sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of GATX, Expeditors and SkyWest have rallied more than 29%, 36% and 69%, respectively, in a year’s time.

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