Finnair Oyj is a Finland-based airline company which provides air transport operations and supporting services. It is engaged in delivering services for scheduled passenger and charter traffic as well as cargo sales, customer service and service concepts, flight operations and activities connected with the procurement and financing of aircraft. The company also provides travel services which consist of travel agency operations as well as tour operations and travel sector software business operations. Its travel services provide various travelling packages to customers through its travel operators and travel agencies. It manages its business in two segments namely Airline Business and Travel Services. The company’s majority of the revenue comes from passenger ticket sales and belly cargo.
Description taken from www.nordnet.se
Charts
Statistics
The numbers analysis below is the first step in Rule 1 Investing by Phil Town. In his book Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! (no affiliate) he writes about his investing philosophy which centers around four key principles he refers to as the Four M’s: Meaning, Moat, Management and Margin of Safety.
The first requirement is an average annual growth rate of at least 10%, the past 10 years, in the ROIC (Return On Invested Capital), Sales, EPS (Earnings Per Share), Equity and Cash Flow. The average 5 year and 1 year growth rates should also be above 10%. High growth rates suggest a sustainable MOAT.
Next step is to analyse the the Four M’s: Meaning, Moat, Management and Margin of Safety.
The aim is to find a fantastic company, with a great track record, to invest in for at least 10 year. The expected average yearly return is at least 15%. This is used in the calculations. With an investment of 100 USD and a yearly return of 15%, 100 USD will have increased to 405 USD in 10 years time because of interest-on-interest or compound interest.
| Year | 2010 | 2011 | 2012 | 2013 | 2014 |
| ROIC | |||||
| Sales (MEUR) | 2023 | 2258 | 2449 | 2400 | 2284 |
| EPS (EUR) | -0.24 | -0.75 | 0.01 | 0.11 | -0.71 |
| Equity/share (EUR) | 6.67 | 5.89 | 6.06 | 5.3 | 4.02 |
| Operational cash flow (MEUR) | 76 | 51 | 155 | 142 | 24 |
| P/E | -21.09 | -3.07 | 174.96 | 25.02 | -3.47 |
| Year | 2015 | 2016 | 2017 | 2018 | 2019 |
| ROIC | -0.4% | 1.6% | 5.0% | 4.6% | 3.4% |
| Sales (MEUR) | 2255 | 2317 | 2568 | 2836 | 3098 |
| EPS (EUR) | 0.57 | 0.55 | 1.23 | 0.7 | 0.49 |
| Equity/share (EUR) | 5.69 | 6.73 | 7.95 | 7.2 | 7.57 |
| Operational cash flow (MEUR) | 171 | 220 | 382 | 504 | 565 |
| P/E | 9.46 | 7.32 | 10.43 | 10.17 | 12.12 |
Growth Rates
| Yearly average | 10 year | 5 year | 1 year |
| ROIC | 3% | 3% | 3% |
| Sales Growth Rate | 5% | 8% | 9% |
| EPS Growth Rate | n/a | -4% | -30% |
| Equity Growth Rate | 1% | 7% | 5% |
| Cash Flow Growth Rate | 29% | 35% | 12% |
| Growth rates x 2 | Average P/E | Median P/E | |
| P/E | 2.00 | 22.19 | 9.80 |
| Calculated future price in 10 years | 1.08 | 12.01 | 5.3 |
| Calculated Price | 0.27 | 3 | 1.33 |
| Margin of Safety (50%) | 0.14 | 1.5 | 0.66 |
Current price: 0.55 EUR
I’m mainly looking into airline companies because I’m looking for possible trades.
To be considered for further analysis here, as a growth stock, the requirement is that the 10 year yearly average growth rate is at least 5% in all five categories. They are not.
However I will also have a look at Lufthansa and Norwegian Air Shuttle since these are some of the companies I can trade through my broker.
To read my post where I compare with Lufthansa and Norwegian Air Shuttle follow the link below.
Finnair vs Lufthansa vs Norwegian – comparing airlines