Norway Royal Salmon AS (OB:NRS), a øre8.94b small-cap, operates in the consumer staples sector, which is facing a change in consumer taste and pressure for organic and sustainable foods, spurred by more health-conscious consumers. Consumer staple analysts are forecasting for the entire industry, a highly optimistic growth of 37.06% in the upcoming year , and a whopping growth of 52.38% over the next couple of years. This rate is larger than the growth rate of the NO stock market as a whole. Today, I will analyse the industry outlook, and also determine whether Norway Royal Salmon is a laggard or leader relative to its consumer staples sector peers.
View our latest analysis for Norway Royal Salmon
What’s the catalyst for Norway Royal Salmon’s sector growth?
Disruption from consumers is becoming more prominent than that of industry competitors. Consumers are predominantly leaning towards more health-conscious alternatives such as whole and raw ingredients. Furthermore, companies that are now emerging are latching on these trends with efficient business models. In the past year, the industry delivered growth of 2.89%, though still underperforming the wider NO stock market. Norway Royal Salmon lags the pack with its negative growth rate of -30.63% over the past year, which indicates the company has been growing at a slower pace than its food product peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 51.37% in the upcoming year. This future growth may make Norway Royal Salmon a more expensive stock relative to its peers.
Is Norway Royal Salmon and the sector relatively cheap?
The food product sector’s PE is currently hovering around 16.06x, relatively similar to the rest of the NO stock market PE of 13.66x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a higher 19.74% compared to the market’s 11.05%, potentially illustrative of past tailwinds. On the stock-level, Norway Royal Salmon is trading at a PE ratio of 17.23x, which is relatively in-line with the average food product stock. In terms of returns, Norway Royal Salmon generated 24.94% in the past year, which is 5.20% over the food product sector.
Next Steps:
Norway Royal Salmon’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Norway Royal Salmon has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Norway Royal Salmon’s fundamentals in order to build a holistic investment thesis.