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
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 (MNOK) | 8598 | 10532 | 12859 | 15580 | 19534 |
| EPS (NOK) | 2.8 | 2 | 7.4 | 5.1 | -17.3 |
| Equity (MNOK) | 1796 | 1946 | 2109 | ||
| Operational cash flow (MNOK) | 805 | 674 | 287 | ||
| P/E |
| Year | 2015 | 2016 | 2017 | 2018 | 2019 |
| ROIC | 7.9% | 2.2% | -2.7% | -2.8% | 0.0% |
| Sales (MNOK) | 22491 | 25951 | 30948 | 40266 | 43522 |
| EPS (NOK) | 3.9 | 17.9 | -28.5 | -19.5 | -7.5 |
| Equity (MNOK) | 2965 | 4048 | 2098 | 1704 | 4125 |
| Operational cash flow (MNOK) | 2357 | 3046 | 2901 | 463 | 3038 |
| P/E | 49.88 | 9.18 | 0 | 0 | 0 |
ROIC rates and P/E are from gurufocus.com
Growth Rates
| Yearly average | 10 year | 5 year | 1 year |
| ROIC | 1% | 0% | |
| Sales Growth Rate | 20% | 18% | 8% |
| EPS Growth Rate | n/a | n/a | n/a |
| Equity Growth Rate | 10% | 9% | 142% |
| Cash Flow Growth Rate | 16% | 7% | 556% |
| Growth rates x 2 | Average P/E | Median P/E | |
| P/E | |||
| Calculated future price in 10 years | |||
| Calculated Price | |||
| Margin of Safety (50%) |
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