Any company without solid foundation, sound corporate culture and management, would experience Safety Factors / Issues, that makes them prone
to incidents, and/or, lead to an accident. Especially during "expansion".
However, the Non-sustainable, preceding paramount issues here, are:
Rising Overcapacity, Rising Debt, Rising Financing Interest Rates, Rising Volatility, Rising Fuel Prices, Rising Competition, Escalating Fare Wars, and,
Underpaid / Overworked Labor Force.
" To answer the problem statement, we will do a fundamental valuation of Norwegian Air Shuttle ASA.
First we did a strategic analysis, consisting one external analysis and one internal analysis. This gave us the foundation for predicting future development and environment of the company.
From the external analysis we found that the European market is driven by low margins and fierce competition. We also tested our findings with a sensitivity analysis to find what factors will have the biggest effect on the estimated value per share.
The sensitivity-analysis showed us that our model is highly sensitive to the fuel cost and the currency combined due to high volatility and sensitivity towards the cost of debt.
The sensitivity towards the cost of debt is driven by NAS having a high debt to equity ratio."
About Debt to Equity Ratio
Leverage ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. A low debt to equity ratio indicates lower risk, because debt holders have less claims on the company's assets.
A debt to equity ratio of 5 means that debt holders have a 5 times more claim on assets than equity holders.
A high debt to equity ratio usually means that a company has been aggressive in financing growth with debt,
and, often results in volatile earnings as a result of the additional interest expense and a driver of stock performance / risk.
S A S AB's Debt to Equity Ratio (Quarterly ) : 0.00 for July 2016.
Norwegian Air Shuttle Debt to Equity Ratio (Quarterly): 5.83 for Sept. 2016.
Norwegian Air Shuttle Debt to Equity Ratio ( Annual ) :
Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15
0.99 > 1.38 > 2.19 > 2.28 > 2.37 > 6.30 > 6.61
Norwegian Air Shuttle And Companies / Investment Rating = Baa3
Investment Grade: Aaa → Aa1 → Aa2 → Aa3 → A1 → A2 → A3 → Baa1 → Baa2 → Baa3
Long-term Corporate Obligation Ratings are the relative credit risk of fixed-income obligations with an original maturity of 1 year or more.
The ratings reflect both the likelihood of default and any financial loss suffered in the event of default. "
Global Credit Research
Last edited by marvelman; 9th Jan 2017 at 19:51.