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Many of my recent posts have been about key figures, models and valuation logic - and how to use them to systematically classify companies. I've been wondering for some time whether Ryanair could be a good addition to my portfolio. This is precisely why the airline is particularly well suited to show how an established business model can be valued using HQR logic, a 10B approach, fundamental ratios and a clearly derived scenario model.
Ryanair $RYAAY (-0,89%) / $RYA (-0,13%) at first glance appears to be a classic low-cost company. However, behind this simple concept lies an efficiency model that has been optimized over decades. Complete standardization on Boeing 737 aircraft, extremely fast turnarounds, strict cost discipline and a stable logic of additional revenues - from baggage to seat selection to partner services - form an operational framework that is virtually unrivalled in Europe. The strength of this model lies less in price setting than in the consistent implementation of clear cost leadership.
Through subsidiaries in Ireland, Malta, Poland and the UK, Ryanair can flexibly shift capacities and rebalance routes according to demand. More than 200 million passengers per year generate economies of scale that have a lasting effect and are difficult to copy. This is precisely why the moat is less spectacular than it is effective: a large, standardized fleet, an extremely disciplined organization and a business model that works in a self-contained manner.
The current business figures underpin this construction. In FY25, Ryanair achieved a turnover of 13.95 billion euros and a profit of 1.61 billion euros. In the current half-year, the result is already above 2.5 billion euros. The balance sheet shows net liquidity of around two billion euros and the equity ratio remains in the region of 40 percent. The operating margin is 14 to 15 percent - and thus noticeably above the previous year's level.
The most important key figures at a glance:
- P/E ratio (TTM): approx. 13.4
- P/E ratio (forward): approx. 12.5
- P/E ratio: approx. 1.9
- EV/Sales: approx. 1.78
- EV/EBITDA: approx. 7.8
- Free cash flow yield: approx. 7.4
- ROE: approx. 27
- ROIC: approx. 13
- Debt/EBITDA (gross): approx. 0.69
- Operating margin (TTM): approx. 14-15%
- PEG ratio: approx. 0.74
- Rule of 40: approx. 29
The German listing (ISIN IE00BYTBXV33 / $RYA (-0,13%)) is quoted in the range of EUR 25 to 26. The US ADR listing ($RYAAY (-0,89%) ) was last quoted at USD 68.16 and serves as a reference for most analyst models, as this is where the highest trading volume takes place. Valuation ratios such as the P/E ratio are independent of the currency, but price targets are calculated in USD and later translated into euros.
The current level provides a useful starting point for the profit paths of the coming years. Earnings per share are around 4.25 US dollars. Traffic is growing steadily, additional revenue per passenger is increasing and the operating margin has stabilized again after two volatile years. This triad results in a neutral expected value of around five dollars. This means that Ryanair will continue its core business without any additional positive or negative stimuli.
A bullish earnings level assumes that several factors have a constructive effect at the same time: a more stable fuel environment, unchanged or only moderately rising fees in Italy, Spain and the UK and a more reliable delivery performance at Boeing. This would give the margin additional leeway and anchor the development of demand at the upper end of previous expectations. In such an environment, earnings of between USD 6.0 and 6.4 per share are realistic.
On the other hand, there are the cyclical risks that reliably accompany airlines. Higher kerosene prices, regulatory interventions or further delays in the fleet program can put pressure on the operating margin and temporarily depress growth. Under these conditions, the result is more likely to be between 3.8 and 4.2 US dollars - a range that is historically well covered by comparable years.
Weighting the three scenarios together leads me to a target value close to USD 66 to 67:
- Bullish (25%, probability of occurrence: own estimate):
- EPS USD 6.0-6.4 → Target price USD 90-102
- Neutral (50%, probability of occurrence: own assessment):
- EPS USD 5.0-5.3 → Target price USD 60-70
- Bearish (25%, probability of occurrence: own assessment):
- EPS USD 3.8-4.2 → Target price USD 35-42
From an HQR perspective, Ryanair is clearly a quality stock: high returns on capital, robust balance sheet, strong operating structure. The under-the-radar potential remains low, as the market has known the company for years and the key figures are largely transparent. The 10B model shows the same pattern: a clear moat, but no structural leverage for a revaluation. Ryanair is efficient, stable and predictable - but not structurally undervalued.
For me, this does not make it an immediate buy. The valuation is fair, not cheap. The operational strength is visible and is rewarded accordingly. Ryanair remains a high-quality stock that will only become interesting at a more attractive entry level with a sufficient safety buffer. Until then, the share remains a watchlist candidate for me.
