Shares of Ryanair Holdings RYAAY have declined 27.6% year to date as the stock is mired in multiple headwinds.
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Apart from high fuel costs, labor woes are plaguing this European carrier, which currently carries a Zacks Rank # 5 (Strong Sell). The negativity surrounding the stock is evident from the Zacks Consensus Estimate for current-year earnings being revised 10.1% downward over the past 60 days.
Highlighting the labor woes, RYAAY’s cabin crew in some European countries like Belgium, Spain and Italy went on strike over the weekend. The cabin crew unions accused the Irish carrier of being insensitive toward local labor laws pertaining to minimum wage and working conditions.
However, per a Reuters report, the strikes in various European nations did not leave much impact on the airline’s operations. Per management, "Less than 2% of Ryanair's 9,000 flights operating this weekend (24/25/26 June) have been affected by minor and poorly supported crew strikes". Cabin crew members in Spain are scheduled to go on a strike again for three days starting Jun 30.
RYAAY will be hoping that the impending strikes may also not affect its operations as was the case this weekend. This is because if the strikes work, then RYAAY’s plans of attracting a significant traffic during the summer may take a hit.
Driven by elevated traffic, RYAAY expects load factor (% of seats filled by passengers) readings to be impressive this summer. Watch this space for further updates on this key issue.
Stocks to Consider
Some better-ranked stocks in the broader Zacks Transportation sector are Ryder System R,C.H. Robinson Worldwide CHRW and GATX Corporation GATX.
Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States.
Revenues in all segments grew (on higher rental revenues, new business and favorable pricing) in first-quarter 2022. R currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The expected long-term (three-to-five years) earnings per share growth rate for C.H. Robinson is pegged at 9%.Better freight market conditions are aiding CHRW.
In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing for customers and handsome profits in ocean freight. CHRW currently sports a Zacks Rank #1.
GATXhas a trailing-four quarter surprise of 40.1%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters.
The gradual improvement in the North American railcar leasing market is a boon for GATX. GATX currently has a Zacks Rank of 2.
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