Numbers analysis: Norwegian Air Shuttle

Norwegian Air Shuttle ASA and its subsidiaries operate airlines through a global route network. It offers scheduled and chartered services and attempts to maximize aircraft and crew utilization. Approximately three-fourths of total revenue is derived from transporting passengers, with the remainder coming from ancillary and other air-related services. Norwegian Air utilizes a frequent-flyer program, and additional services may be purchased to aid special travelling accommodations. The company’s route portfolio spreads to the Americas, the Middle East, and Asia, but roughly one-fifth of revenue stems from routes through Norway, Sweden, Denmark, and Finland.

Description taken from www.nordnet.se

Charts

10 year weekly chart
1 year daily chart

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.

Year20102011201220132014
ROIC
Sales (MNOK)859810532128591558019534
EPS (NOK)2.827.45.1-17.3
Equity (MNOK)179619462109
Operational cash flow (MNOK)805674287
P/E
Year20152016201720182019
ROIC7.9%2.2%-2.7%-2.8%0.0%
Sales (MNOK)2249125951309484026643522
EPS (NOK)3.917.9-28.5-19.5-7.5
Equity (MNOK)29654048209817044125
Operational cash flow (MNOK)2357304629014633038
P/E49.889.18000

ROIC rates and P/E are from gurufocus.com

Growth Rates

Yearly average10 year5 year1 year
ROIC1%0%
Sales Growth Rate20%18%8%
EPS Growth Raten/an/an/a
Equity Growth Rate10%9%142%
Cash Flow Growth Rate16%7%556%
Growth rates x 2Average P/EMedian P/E
P/E
Calculated future price in 10 years
Calculated Price
Margin of Safety (50%)
Fair value prices are not possible to calculate beacuse of a negative EPS.

Current price: 1.3 NOK

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 Finnair and Lufthansa since these are some of the companies I can trade through my broker.

To read my post where I compare with Lufthansa and Finnair follow the link below.
Finnair vs Lufthansa vs Norwegian – comparing airlines

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