Key points
For the three months to 31 December 2021, revenue rose to £805, up from £165m year on year
In the same period, easyJet carried 11.9m passengers, an improvement from 2.9m a year previously
The price of jet fuel may increase because of the Ukraine conflict
A big player in the short-haul airline sector, easyJet (LSE: EZJ) has been hit bard during the Covid-19 pandemic. Like many of its peers, the company’s operations more or less ground to a halt for long periods of time. Recent results suggest the market is improving, however, and some countries have already removed all pandemic-related restrictions. With a spare £500, should I buy at the current easyJet share price? Let’s take a closer look.
Recent results and the easyJet share price
In a trading update for the three months to 31 December 2021, the company reported that revenue rose from £165m to £805m. In addition, pre-tax losses almost halved to just £213m. For me, this suggests that the firm is on a solid path to recovery.
Another metric by which to gauge the health of an airline stock is its passenger numbers. For the same period, the business carried 11.9m passengers. This is equivalent to 64% of the same period in 2019, before the pandemic struck. It is also an increase from 2.9m, year on year.
This prompted S&P Global Ratings to upgrade the company to ‘stable’. It stated that is expects “much improved” results for the airline in the near future. Following this announcement, easyJet shares were trading at 643.8p. At the time of writing, the share price is 578.6p, down 27% over the past year.
A mixed outlook
The conflict in Ukraine resulted in big increases to oil and gas prices. This is because there is greater fear of decreasing supply. This could negatively impact the easyJet share price, because the cost of jet fuel will likely rise in the months ahead. While the firm may have hedged some of its jet fuel at lower prices, the company will probably have to pay more in the future.
It is also worth noting that any future pandemic variant could result in more closed borders and less international travel. While I think this is a remote possibility, it is something I am weighing into my investment decision.
Despite this, some countries are reopening their borders. While many still have vaccination and testing requirements, like Spain, others have removed all restrictions. An example is Norway, which has essentially returned to pre-pandemic conditions. Sweden has followed suit, but only for EU citizens for the moment. I predict that more countries will adopt this attitude, resulting in a domino effect.
I think the outlook for the easyJet share price is bright. While there are risks, including jet fuel costs and other variants, I think results show the company is moving in the right direction. I will be buying shares today with my spare £500.
The post Is the easyJet share price a good buy with a spare £500? appeared first on The Motley Fool UK.
FREE REPORT: Why this £5 stock could be set to surge
Are you on the lookout for UK growth stocks?
If so, get this FREE no-strings report now.
While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.
And the performance of this company really is stunning.
In 2019, it returned £150million to shareholders through buybacks and dividends.
We believe its financial position is about as solid as anything we’ve seen.
Since 2016, annual revenues increased 31%
In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
Operating cash flow is up 47%. (Even its operating margins are rising every year!)
Quite simply, we believe it’s a fantastic Foolish growth pick.
What’s more, it deserves your attention today.
So please don’t wait another moment.
Get the full details on this £5 stock now – while your report is free.
More reading
The easyJet share price has plunged 40% in a year. Here’s what I’d do now
Best British stocks for March
The easyJet share price: an exciting recovery investment?
If I’d invested £1,000 in easyJet shares in 2020, here’s how much I’d have today
Why I think the easyJet share price will fly
Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
