EasyJet share price has moved sideways in the past few weeks as it continued to underperform other airlines like United Airlines and IAG, the parent company of British Airways. The EZJ stock was trading at 542p, up by 95% from its lowest level in 2023.
EasyJet share price steady after earnings
The EZJ stock price stabilized this week after the company published strong financial results, outperforming other companies.
These numbers showed that its profit jumped to a record high of £960 million as demand and cost cutting measures improved. It now hopes to become a £1 billion company in terms of profitability.
Its profit before tax per seat increased by 24% to £6.08. Similarly, the holidays PBT rose by 56% to £190 million even. These numbers were notable because the industry saw major challenges in the past few months.
Recent data showed that the cost of flying continued falling, which affected most airlines revenue and profitability. The industry also struggled because of the challenges faced by Boeing and Airbus, the two biggest manufacturers in the industry.
Boeing’s deliveries have fallen amid a regulatory scrutiny, while some Airbus planes are being repaired after faults in Pratt & Whitney’s engines.
EasyJet’s results showed that the company carried over 89.7 million passengers in FY’24, a small decline from the 82.8 million it carried last year. The average revenue per seat was £81.35, while the average fuel cost per seat rose slightly to £22.14. EasyJet’s profit before tax rose to £610 million.
Meanwhile, the company continued to modernise its fleet by placing 299 firm orders for its A320 and A321 planes. It also has 100 purchase rights from Airbus. In a note, Kenton Jarvis said:
“The outlook for easyJet is positive and travel remains a firm priority with consumers who value our low fares, unrivalled network and friendly service. The airline will continue to grow, particularly on popular longer leisure routes like North Africa and the Canaries and we plan to take 25% more customers away on package holidays.”
EasyJet also has one of the best balance sheets in the industry. It has an average BBB/Baa2 credit rating with a positive outlook. This makes it better rated than other companies, including popular names like United, Delta, American, and Lufthansa.
This strong balance sheet and free cash flow has helped it start paying and increasing its dividend. It boosted its dividend by 20% of its profit after tax.
Further, there are signs that EasyJet share price is undervalued compared to other airlines. It has a trailing price-to-earnings ratio of 10, much lower than other popular airlines like IAG and American Airline.
EasyJet is also making progress as it seeks to become a bigger rival to Ryanair, the dominant player in Europe. It is increasing the number of planes, routes, while slashing costs in a bid to grow profits
Most importantly, the company’s packaged tours business is thriving as it seeks to compete with TUI Group and Jet2.
EasyJet share price analysis
The weekly chart shows that the EZJ stock price has been in an uptrend in the past few months and has now jumped to an eight-month high. It has moved above the 50-week and 100-week Exponential Moving Averages (EMA).
The EasyJet stock price also jumped above the 23.6% Fibonacci Retracement level. Also, the MACD indicator has moved above the zero line, while the Relative Strength Index (RSI) has risen to 58.
Therefore, there is a likelihood that the stock will continue rising and possibly hit the 50% retracement level at 770p, which is 40% above the current level.
The biggest technical risk for the EZJ share price is that it has formed a rising wedge pattern, a popular bearish reversal sign. If this pattern works out, there is a risk that the stock will have a bearish breakout and possibly retest the key support at 418p, the lowest swing on August 5. A break below that level will point to more downside.
Read more: EasyJet share price analysis: buy, sell, or hold?
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