EasyJet hits ten-month high

EasyJet (EZJ.L), the largest airlines company by market capitalisation in the United Kingdom, traded at its 218-day high of GBX394.60. The stock price increased GBX7.20 (or 1.9%) to close at GBX393.10. Compared with the FTSE 100 index, which fell 5.3 points (or 0.1%) on the day, this was a relative price change of 2.0%. Access comprehensive Stock Research on http://www.buysellsignals.com/1831324

Source News Bites - Western Europe : United Kingdom

Dec. 29, 2011

13 min read

Access comprehensive Stock Research on http://www.buysellsignals.com/1831324

Price Change % 1-day 1-month 1-year EZJ 1.87% 11.64% -7.53% Airlines 1.83% 6.8% -7.31% FTSE 100 -0.1% 3.66% -8.35%

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PRICE DYNAMICS

Volatility: the stock traded between a three-day low of GBX380.90 and ten-month high of GBX394.60. The price range has expanded in the last two days (from GBX7.90 two days ago to GBX13.70 today) which, accompanied by a price rise, is a bullish signal. Today its volatility of 3.6% was 2.9 times its average volatility of 1.3%. A price rise on high volatility is a bullish signal. The average daily volatility of 3.2% places the stock in the 2nd quartile in the market meaning it is moderately volatile.

% Discount to high: the last price is at a discount of 17.3% to the 12-month high of GBX475.50 a year ago on 10 Jan, 2011.

% Premium to low: the last price is at a premium of 31.0% to the 12-month low of GBX300.10 six months ago on 19 Jul, 2011.

Beta: The Beta of this stock is 0.6. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

Standard Deviation (SD): SD is a statistical measure of deviation from the mean. The SD of 2.6% gives it a percentile rank of 55 meaning that 55% of stocks in the United Kingdom market are less volatile than this stock.

Trailing month: in the last 21 trading sessions there has been a net rise of 11.64%; the stock has advanced 20 times and the biggest one day rise was 3.3% on Nov 30.

AGGREGATE VOLUMES, PRICES AND TURNOVER PERIOD

[Volume Index or VI in brackets; 1 is average]

United Kingdom: EZJ.L 452,002 [VI of 0.3]; volume 99.96% of aggregate. Price: GBX393.10.

OTC Pink: EJETF.PK 200 [VI of 1.8]; volume 0.04% of aggregate. Price: US$6.0. Using the current exchange rate of USD1 equals 64.62GBX, the shares are at a 1.4% discount to the close price in the United Kingdom Stock Exchange.

Aggregate volume: there were 452,202 shares worth GBP1.8 million (US$2.8 million) traded. The aggregate volume was 0.3 times average trading of 1,419,202 shares.

PRICE PERFORMANCE RANK IN INDICES AND SECTORS

The stock is in 3 indices and 2 sectors.

The following sectors rose setting the trend for its rise of 1.9%:

Airlines sector of 3 stocks traded today, which was up 89.1 points or 1.8% to 4,968.2,

The Total United Kingdom Market of 1114 stocks and 165 units traded today, which was up 13.4 points or 0.2% to 6,246.4

The stock's rise went against the trend set by FTSE 100 index which was down 5.3 points or 0.1% to 5,507.4

Percentile Rank 1-day 1-month 6-months EZJ 77 87 90 Airlines 77 77 87 FTSE 100 39 65 64

RELATIVE VALUATION INDICATORS [RVI] FUNDAMENTAL ANALYSIS

The stock meets the following value criteria set by Benjamin Graham:

-"An earnings-to-price yield of at least twice the triple-A bond"; the stock's earning yield of 7.2% is 2.05 times the triple-A bond yield of 3.5%.

The stock has a score of 6 out of 9 set by Joseph Piotroski [pass mark >=5 ]:

Positive net income; Positive operating cashflow; Return on assets improvement [from 1.9% to 3.0%]; Good quality of earnings [operating cashflow exceeds net income]; Improvement in current ratio from 1.4% to 1.42%; Improvement in asset turnover [growth in revenue of 11.68% exceeded growth in assets of 8.97%].

Other Bullish Signals:

- The Price to Book of 1.6 lower than average of 1.6 for the Airlines sector and 1.7 for the Total United Kingdom Market.

- The P/E of 14.0 multiplied by the P/NTA of 1.6 is 22.5. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

- Interest cover defined by EBIT/I is 8.9 times. This indicates it is less leveraged.

Hold Signals:

- Price/Earnings of 14.0 versus sector average of 14.0 and market average of 10.0. We estimate the shares are trading at a current year P/E of 10.9 and a forward year P/E of 8.5.

- Return on Assets of 3.0% versus sector average of 3.0% and market average of 1.4%.

Bearish Signals:

- Price/Sales of 0.57 versus sector average of 0.5 and market average of 0.8. We estimate the shares are trading at a current year Price/Sales of 0.5 and a forward year Price/Sales of 0.5.

- Return on Equity of 8.1% versus sector average of 8.2% and market average of 11.3%.

- Total Liabilities/ EBITDA of 9.9 is more than or equal to 5, this compares unfavourably with the Joseph Piotroski benchmark of 5.

- Price/Earnings/Growth of 0.2 (based on the year-on-year growth in trailing 12 months EPS of 64.7%) versus sector average of 0.2 and market average of 0.4. We estimate the shares are trading at a current year Price Earnings Growth of 0.39 and a forward year Price Earnings Growth of 0.3.

RELATIVE VALUATION INDICATORS [RVI] TECHNICAL ANALYSIS

Bullish Signals:

- The price increased 2.1% in the last week and soared 11.6% in the last month.

- Compared with the FTSE 100 index which rose 3.7% for the month, this represented a relative price increase of 8.0% for the month.

- In the United Kingdom market of 1,114 stocks and 165 units traded today, the stock has a 6-month relative strength of 90 which means it is beating 90% of the market.

- A price rise combined with a high relative strength is a bullish signal.

- The price to 50-day EMAP ratio is 1.1, a bullish indicator. In the past 50 days this ratio has exceeded 1.1 just thrice suggesting a resistance level. The 50-day EMAP has increased to GBX366.564. An increase is another bullish indicator.

- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) minus the 26-day EMA is positive suggesting a bullish signal. Both the 12-day EMA as well as the 26-day EMA are rising, another bullish signal.

- The price to 200-day MAP ratio is 1.13, a bullish indicator. The stock is trading above both its MAPs and the 50-day MAP of GBX364.484 is higher than the 200-day MAP of GBX347.408, a bullish indicator. The 200-day MAP has increased to GBX347.408. An increase is another bullish indicator.

Bearish Signals:

- The price has risen above the upper Bollinger band of GBX391.416; the stock is also overbought according to the Williams % R indicator of -5.1.

SHAREHOLDER RETURNS

Trailing one week: the stock rose three times (60% of the time) and fell twice (40% of the time). The aggregate volume was 0.3 times average trading of 7,202,145 shares. The value of GBX1,000 invested a week ago is GBX1,036 [vs GBX1,021 for the FTSE 100 index], for a capital gain of GBX36(or rise of 3.6%).

Trailing one month: the stock rose eleven times (55% of the time), fell seven times (35% of the time) and was untraded twice (10% of the time). The aggregate volume was 0.5 times average trading of 31,689,438 shares. The value of GBX1,000 invested a month ago is GBX1,116 [vs GBX1,046 for the FTSE 100 index], for a capital gain of GBX116(or rise of 11.6%).

Trailing one year: the value of GBX1,000 invested one year ago is GBX1,042 [vs GBX935 for the FTSE 100 index], including a capital loss of GBX75 and dividend reinvested of GBX118. The total return to shareholders for 1 year is 4.2%.

PVGBX1000 1-week 1-month 1-year EZJ GBX1,036 GBX1,116 GBX1,042 Airlines GBX1,032 GBX1,077 GBX946 FTSE 100 GBX1,022 GBX1,046 GBX935

FINANCIALS

Annual Report for the year ended September 30, 2010 (year-on-year comparisons with previous corresponding period)-

Favourable Changes: total revenue up 11.5% to GBP3.0b ($US4.7b); net profit growth 70.4% to GBP121.3m ($US191.7m); EPS growth 64.7% to 28.0 British penny (US44.25c); a track record of profits in 3 of the last 3 years; total debt to net tangible assets down from 130.3% to 115.6%; total liabilities to EBITDA down 49.7% to 9.9. While this compares unfavourably with the Joseph Piotroski benchmark of <5, the trend is favourable; although the Total Liabilities to Operating Cash Flow ratio of 6.9 also compares unfavourably with the Joseph Piotroski benchmark of <4, it had improved by 60.9% from the previous year.; debt to equity down 5.8% to 0.8; total liabilities to total assets down 1.6% to 0.6; current ratio up 1.4% to 1.4; Net tangible assets per share up 20.6% to GBP2.46 ($US3.9); Retained earnings to total assets up 11.1% to 17.6%; total revenue to total assets up 2.3% to 0.7.

Unfavourable Changes: interest cover down 20.4% to 8.9; Working capital to total assets down 1.6% to 11.3%.

Major Common Size Ratios: total non-current assets to total assets up from 59.6% to 62.2%; fixed assets to total assets up from 43.9% to 48.2%; total current assets to total assets down from 40.4% to 37.8%; cash to total assets up from 21.5% to 22.8%; intangibles to total assets down from 12.2% to 11.3%; EBITDA to Sales up from 4.5% to 8.5%; EBIT to Sales up from 2.3% to 5.8%; profit before tax to sales up from 2.1% to 5.2%; profit after tax to sales up from 2.7% to 4.1%; depreciation to sales up from 2.1% to 2.4%.

MARKET SHARE

EasyJet vs Airlines sector [Airlines sector Total in Brackets]

Revenue of GBX297.3 billion (US$4.6 billion)[92.5% of aggregate sector revenue of GBX321.3 billion; down from 93.1% in the previous year.]

Net Profit of GBX12.1 billion (US$188 million) [97.0% of aggregate sector net profit of GBX12.5 billion; up from 96.7% in the previous year.]

EBIT of GBX17.4 billion (US$269.1 million) [97.0% of aggregate sector EBIT of GBX17.9 billion; up from 91.6% in the previous year.]

FUNDAMENTALS

EPS growth: The implied future growth rate of earnings per share required to justify the current Price Earnings Multiple of 14.0 on trailing twelve months is 1.3%, based on a formula devised by Benjamin Graham. This is lower than the year-on-year growth rate in eps of 64.7%, suggesting the stock may be undervalued.

Valuation EZJ FTSE 100 P/E 14.0x 11.2x P/E/G 0.2x 0.5x P/S 0.6x 0.8x Size EZJ Rank in Total United kingdom Market MCAP (GBP) 169.2 billion 122 Assets (GBP) 400.2 billion 107 Revenue (GBP) 297.3 billion 82 Performance EZJ FTSE 100 ROA 3.0% 1.4% ROE 8.1% 12.0% EPS Growth YOY 64.7% 22.6%

ISSUED CAPITAL

Based on 430,320,000 issued equity shares the market capitalisation is GBP1.7 billion (US$2.6 billion). It is United Kingdom's largest Airlines company by total revenue.

ACTIVITIES

easyJet plc, together with its subsidiaries, operates as a passenger airline carrier primarily in Europe. It operates approximately 509 routes serving 125 airports in 29 countries. The company also involves in the trading and leasing of aircrafts. As of September 30, 2010, it operated a fleet of 196 aircrafts serving business and leisure customers. The company was founded in 1995 and headquartered in Luton, the United Kingdom.

TOP MANAGEMENT

The chairman is Michael Rake.

REPORTED BUYING

Reported Buying: