The easyJet share price continues to fall. Is it a no-brainer buy?

The easyJet share price has been on quite a journey. However, with it falling, this Fool explores whether now is the time to buy.

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Despite the easyJet (LSE: EZJ) share price rising by nearly 20% in 2023, it’s down over 6% in the last 12 months.

Investors in easyJet have had it far from easy in the last five years. A consistent period of growth was abruptly brought to a halt by the pandemic. Since its lows in April 2020, the share price has experienced a lot of turbulence.

But as a Fool, I’m always seeking a bargain. Am I staring one in the face with easyJet?

easyJet positives

Well, there’s certainly a case to be made. First of all, it has posted some strong results in recent times. For example, its latest trading update forecasted a pre-tax profit for the year of between £440m and £460m.

This momentum may be in part due to what easyJet offers. It’s a low-budget airline that provides travel to a myriad of destinations. As a consumer, and with a cost-of-living crisis, what’s not to like?

What I particularly liked was the growth seen in its holiday division. This offers package holidays including multiple perks. And with it forecast to post a £120m profit for the year, it’s clearly growing in popularity.

With all this growth, there’s also been rumblings of a potential dividend. What’s more, looking at its balance sheet, the business is in a much healthier financial position than a host of its competitors.

Thinking long term

Its recent agreement with Airbus highlights how the business is planning for the years ahead. As part of a new deal, its agreed to buy over 150 short-haul aircraft for delivery from 2029. On top of that, there are purchase rights for an additional 100 aircraft.

easyJet pressures

The largest threat to easyJet, as is the case with many other businesses, is inflation. A Covid hangover has seen rates surpass levels not seen in over 10 years. And with this, I’m worried consumers may cut back on discretionary expenses. Granted, the firm has posted strong momentum. However, the threat of holidaymakers tightening their belts will remain as long as inflation persists. Inflation isn’t expected to hit 2% until the end of 2025.

Rising fuel prices are also of concern. We saw the direct impacts last year when the war in Ukraine commenced. And the current events in the Middle East have had a similar effect.

That said, easyJet has hedged itself against rising prices. Its hedged nearly three-quarters of its fuel requirements for the first half of FY24. It’s also done the same for 46% of the second half.

A no-brainer?

So, is it a no-brainer buy?

I like easyJet a lot. Inflation may dent its profits. But as a Fool, I see this as a short-term concern. What’s more, the business is arguably in a strong position to benefit as holidaymakers look for cheaper alternatives.

However, there are many issues surrounding the company.

I’m on the lookout for UK shares that I can add to my portfolio today for the years ahead. Right now, I’ll be keeping easyJet on my watchlist, as I certainly like the look of it. If in the weeks ahead I have some spare cash, I’ll consider opening a position.

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.

Charlie Keough 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.

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