Good news already factored into the Ryanair share price
RYANAIR'S better-than-expected third quarter results increase the likelihood of a major cash payout to shareholders. For the three months to the end of December, Ryanair reported an after-tax loss of €11m, much lower than the €28m that most analysts had been expecting.
Having already announced plans to cut back on the purchase of new aircraft from Boeing last December, it is clear that Ryanair will generate tonnes of cash that can be given back to shareholders.
Merrion Stockbrokers reckons that the airline will have up to €1bn available to hand back to shareholders by the end of the year to March 2013. That works out at about 65¢ per share.
That's the good news. The bad news is that with the Ryanair share price having jumped by almost a quarter since late November, the impact of any cash distribution is already included in the price.
Strip out a likely €1bn cash giveback and the rest of Ryanair's business is valued at just under €4bn at the current share price. With annual passenger growth likely to slow from the 20 per cent of recent years to single digits over the next three years, it is hard to see the price rising much above current levels for the foreseeable future.