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After reading SalMar ASA's (OB:SALM) most recent earnings announcement (31 March 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether SalMar's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
How SALM fared against its long-term earnings performance and its industry
SALM's trailing twelve-month earnings (from 31 March 2019) of øre3.6b has jumped 40% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 22%, indicating the rate at which SALM is growing has accelerated. What's the driver of this growth? Well, let’s take a look at whether it is merely because of an industry uplift, or if SalMar has experienced some company-specific growth.
In terms of returns from investment, SalMar has invested its equity funds well leading to a 34% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 22% exceeds the NO Food industry of 13%, indicating SalMar has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for SalMar’s debt level, has increased over the past 3 years from 20% to 31%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 49% to 13% over the past 5 years.
What does this mean?
SalMar's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research SalMar to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SALM’s future growth? Take a look at our free research report of analyst consensus for SALM’s outlook.
- Financial Health: Are SALM’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.