Easyjet Finals today....

...which is one I suggested getting on board back in June this year when it was sub 1600p.
At that time I felt 1800p was a reasonable target and I flagged that they had arrived at this destination in this post in October. So if you didn't take your profits back then and stayed  on board for the finals and the annual dividend then you might be interested in the final results announced today.

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There were no great surprises in these numbers today as Easyjet (EZJ) are pretty good at providing guidance as they go through the year. So it was little surprise to see the Pre Tax Profits coming in at £686m pretty much in the middle of their last guidance range of £675m to £700m. The basic earnings came in slightly ahead of forecasts at 139.1p v 136p forecast but oddly the dividend was behind forecasts at 55.2p (+21.6%) v 59.7p forecast. I say oddly because in the statement they said this was in line with their 40% payout target which would have suggested 54.4p based on the consensus earning figure.

Most of their important operating metrics like load factors & revenues per seat were also moving in the right direction and this helped them to increase operating margins by 1.8% to 14.6% and ROCE by 1..7% to 22.2%. as the increase in profit more than made up for the increase in fleet. However this may be as good as it gets on this front as they did go on to say: "As we embark on a new phase of fleet acquisition we expect this to reduce slightly in the next few years, whilst remaining among the higher performers in the market."

On the outlook they say they are looking to increase their capacity by a further 7 to 8% to expand some of their new bases such as Amsterdam and Hamburg. On current trading they said demand remained resilient and forward bookings are in line with last year. They expect a further £140-£160m benefit from lower oil prices offset to a certain extent by currency effects of £40m and costs overall are therefore expected to be down by 1% but would have otherwise been up by 2%.

Summary & Conclusion
So a good set of numbers as expected from Easyjet and apart from that they say they are trading in line with current expectations for the coming year - so probably no upgrades on that basis. So taking the current forecast for this year of 149p and say 59.6p (+8%) of dividend based on a 40% pay out ratio gives a reasonable looking PE of 11.6x & a yield of 3.4% at this mornings price of 1733p (=2.7%). Given this years operating margin this also mean that the earnings yield is approaching 10% too which is also attractive.

It also scores well on Stockopedia and the Compound Income Scores with figures of 88 & 82 respectively which suggest it is attractive and probably worth holding onto, although you have to be prepared to accept the inherent volatility of their trading results given all the different variables and unpredictable events that can buffet them from time to time.

On the technical front it look OK if a bit mid range now, but possibly with support from the rising 50 and 200 day moving averages around current levels. If it should get a tail wind of a possible year end / New Year rally in the market and buyers come in for the annual dividend then I guess it could possibly challenge the 12 month highs around 19oop - perhaps. Finally to give them some support I have booked myself a trip, flying with Easyjet of course, to visit Paris next spring - Vive la France.