P/F Bakkafrost's (OB:BAKKA) Earnings Dropped -16%, How Did It Fare Against The Industry?

Simply Wall St

After looking at P/F Bakkafrost's (OB:BAKKA) latest earnings update (31 December 2019), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.

See our latest analysis for P/F Bakkafrost

Did BAKKA perform worse than its track record and industry?

BAKKA's trailing twelve-month earnings (from 31 December 2019) of ø810m has declined by -16% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -0.6%, indicating the rate at which BAKKA is growing has slowed down. Why is this? Well, let's look at what's occurring with margins and if the rest of the industry is facing the same headwind.

OB:BAKKA Income Statement, February 27th 2020

In terms of returns from investment, P/F Bakkafrost has fallen short of achieving a 20% return on equity (ROE), recording 9.4% instead. Furthermore, its return on assets (ROA) of 6.3% is below the NO Food industry of 7.6%, indicating P/F Bakkafrost's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for P/F Bakkafrost’s debt level, has declined over the past 3 years from 33% to 8.3%.

What does this mean?

Though P/F Bakkafrost's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I recommend you continue to research P/F Bakkafrost to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for BAKKA’s future growth? Take a look at our free research report of analyst consensus for BAKKA’s outlook.
  2. Financial Health: Are BAKKA’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.
  3. 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 December 2019. This may not be consistent with full year annual report figures.

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.

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