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What Should You Know About SalMar ASA's (OB:SALM) Growth?

Simply Wall St

After SalMar ASA's (OB:SALM) recent earnings announcement in March 2019, analyst consensus outlook seem bearish, as a 12% fall in profits is expected in the upcoming year relative to the past 5-year average growth rate of 22%. Currently with a trailing-twelve-month profit of kr3.6b, the consensus growth rate suggests that earnings will drop to kr3.1b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for SalMar

Can we expect SalMar to keep growing?

Over the next three years, it seems the consensus view of the 7 analysts covering SALM is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of SALM's earnings growth over these next few years.

OB:SALM Past and Future Earnings, August 22nd 2019

By 2022, SALM's earnings should reach kr3.9b, from current levels of kr3.6b, resulting in an annual growth rate of 8.5%. EPS reaches NOK34.59 in the final year of forecast compared to the current NOK31.7 EPS today. However, the near term margins may change heading into 2022, from the current levels of 32% to 30%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For SalMar, there are three pertinent factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is SalMar worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SalMar is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SalMar? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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 editorial-team@simplywallst.com. 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.