Is the easyJet share price a good buy with a spare £500?

With improving results and travel conditions, should I invest £500 at the current easyJet share price?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

Investing Articles

Can Rolls-Royce shares keep on soaring in 2025?

2024 so far has been another blockbuster year for Rolls-Royce shares. Our writer thinks the share could still move higher.…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

Here’s the worst thing to do in a stock market crash (it isn’t selling)

When the stock market falls sharply – as it does from time to time – selling is often a bad…

Read more »

New year resolutions 2025 on desk. 2025 resolutions list with notebook, coffee cup on table.
Investing Articles

My top 2 growth shares to consider buying in 2025

For investors looking for top growth shares to buy in the New Year, I reckon this pair are well worth…

Read more »

Investing Articles

3 massive UK shares that could relocate their listing in 2025

I've identified three UK companies that may consider moving their share listing abroad next year. What does this mean for…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

2 common mistakes investors make with dividend shares

Stephen Wright outlines two common mistakes to avoid when considering dividend shares. One is about building wealth, the other is…

Read more »

Investing Articles

Here’s how I’ll learn from Warren Buffett to try to boost my 2025 investment returns

Thinking about Warren Buffett helps reassure me about my long-term investing approach. But I definitely need to learn some more.

Read more »

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Here are the best (and worst) S&P 500 sectors of 2024

While the S&P 500 has done well as a whole, some sectors have fared better than others. Stephen Wright is…

Read more »

Investing Articles

2 FTSE 100 stocks I think could be takeover targets in 2025

If the UK stock market gets moving in 2025, I wonder if the FTSE 100 might offer a few tasty…

Read more »