Ryanair may be overvalued with poor growth indicators, but the 4 analysts following the company give it an average rating of buy. The analysts have set target prices ranging from $110.0 to $148.0 per share, for an average of $120.75. At today's price of $105.88, Ryanair is trading -12.31% away from its average target price, suggesting there is an analyst consensus of some upside potential.
Ryanair Holdings plc, together with its subsidiaries, provides scheduled-passenger airline services in Ireland, the United Kingdom, Italy, Spain, Germany, and other European countries. Based in Swords, Ireland, the large-cap Consumer Discretionary company has 21,000 full time employees. Ryanair has not offered a regular dividend during the last year.
Ryanair has a trailing twelve month P/E ratio of 15.8, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of 7.23, the company has a forward P/E ratio of 14.6. Based on the 20.0% compound average growth rate of Ryanair's historical and projected earnings per share, the company's PEG ratio is 0.7. This EPS growth rate is likely not sustainable, so will substitute the broader market's 5-year projected EPS growth rate of 10.2%, which gives us a PEG ratio of 1.37. This implies that the shares are fairly valued.
In contrast, Ryanair is likely overvalued compared to its book value, since its P/B ratio of 3.83 is higher than the sector average of 3.12. The company's shares are currently trading 227.6% above their Graham number, implying that they are overvalued in terms of earnings and book value.
So why does Ryanair get a good rating from most analysts despite its lofty valuation? One reason could be its attractive EPS growth rate of 32.2%. However this rate would need to increase to 16.0% to justify its current P/E ratio.
| 2020-03-31 | 2021-03-31 | 2022-03-31 | |
|---|---|---|---|
| Revenue (MM) | $8,495 | $1,636 | $4,801 |
| Gross Margins | 20.1% | -39.0% | 1.5% |
| Operating Margins | 13.3% | -51.3% | -7.1% |
| Net Margins | 7.64% | -62.06% | -5.02% |
| Net Income (MM) | $649 | -$1,015 | -$241 |
| Net Interest Income | -$51,500 | -$53,800 | -$91,400 |
| Depreciation & Amort. | -$748,700 | -$571,000 | -$719,400 |
| Earnings Per Share | $2.9 | -$4.57 | $6.7 |
| EPS Growth | n/a | -257.59% | 246.61% |
| Diluted Shares (MM) | 224 | 222 | 228 |
| Free Cash Flow (MM) | $910 | -$2,743 | $759 |
| Capital Expenditures (MM) | -$1,196 | -$295 | -$1,182 |
| Net Current Assets (MM) | -$5,285 | -$4,223 | -$4,129 |
| Current Ratio | 0.82 | 0.98 | 1.01 |
| Long Term Debt (MM) | $3,583 | $3,518 | $3,715 |
| Net Debt / EBITDA | 1.0 | -5.47 | 6.11 |
