EasyJet is a ‘buy’ as profits soar

17th November 2015


As EasyJet reports its full year results Ian Forrest, investment research analyst at The Share Centre, explains what it means for investors…

Summer demand has meant EasyJet’s full year profits are flying sky high as the group reported this morning that basic earnings per share soared by 21.5%, compared to the same period last year. Profits before tax were up 18% to £686m, whilst revenues were up 3.5% to £4.69bn. The dividend was lifted 22% and investors should acknowledge that cost savings from lower fuel costs and currency affects have supported the group’s margins.

Looking ahead, the company believes it will retain its profit momentum through growing passenger numbers. Subsequently, EasyJet goes into 2016 confident that lower fuel costs, structural cost savings and increased capacity should be supportive of its expectations for the next financial year.

The airline sector is a very competitive one and several are adding capacity at the moment. Due to its focus on cost controls, we continue to favour EasyJet in the sector and currently recommend the group as a ‘buy’ for medium risk investors. Investors should be aware that short-term headwinds from the recent atrocities in France and Sharm El Sheikh could temper demand. However, the lower oil price, better economic growth prospects in Europe, growing capacity and an effective management team are all positive long-term factors for investors.

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