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When Norway Royal Salmon AS (OB:NRS) announced its most recent earnings (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Norway Royal Salmon has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see NRS has performed.
How NRS fared against its long-term earnings performance and its industry
NRS's trailing twelve-month earnings (from 31 March 2019) of øre593m has jumped 15% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 21%, indicating the rate at which NRS is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Norway Royal Salmon has invested its equity funds well leading to a 25% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 15% exceeds the NO Food industry of 13%, indicating Norway Royal Salmon has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Norway Royal Salmon’s debt level, has increased over the past 3 years from 18% to 22%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 49% to 19% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Norway Royal Salmon has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Norway Royal Salmon to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NRS’s future growth? Take a look at our free research report of analyst consensus for NRS’s outlook.
- Financial Health: Are NRS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.