Ryanair Case Study

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Stock valuation                                                                               d[pic 5]Our valuation methods allow us to come up with two valuation values. We computed EUR 20.05 with DCF model and EUR 19.15 with the P/E Valuation Model.

Analyst recommendations 

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Source: Morning star, Financial Times, Zonebourse, WSJ, Marketwatch.

Our assumptions are confirmed by professionals’ analysts. According to 85 professionals from different companies, there is a real trend to buy. Their average of median target price is EUR 18.23. Moreover, 16% are expecting that Ryanair stocks expected a return greater than the average return of the industry.

Key Statistics

Source: Marketwatch as of 13 February 2018

Current environment

The Brexit is one of the main issues Ryanair is facing. The company is waiting for an agreement between the United Kingdom and the Europe to maintain the free airline market. The U.K. flights represent almost 30% of the Ryanair’s revenue and it may have hard consequences for the firm. To face this issue, the company plans to growth in the rest of Europe and Ryanair confirms to be ready to react to the ending result of this issue. The fuel and oil represent 40% of the operating expense and its volatility can be determinant in the annual results.

1. COMPANY OVERVIEW

The company Ryanair is an Irish multinational company which was established in 1985. The business activity concerns the airline sector and more precisely the low-cost carrier. The decision to enter in a low-cost strategy appeared in 1990. The fierce competition caused an accumulate loss of £20M and a structural reform was compulsory. Then, the company decided to change their financial strategy and followed Southwest airlines low fares model. This decision clearly caused an increase in the demand which has been growing until today. This is how Ryanair has become the biggest European low-cost company based on a Low-Cost Leadership Model.