Could salmon be the secret to outperforming the S&P/ASX 200 Index (ASX: XJO) this year?
The Tassal Group Limited (ASX: TGR) share price is down 10.1% this year. That means the Aussie salmon producer isn't smoking its ASX 200 peers just yet.
But, is now the perfect chance to snap up Tassal shares for a bargain ahead of the company's August earnings?
What does Tassal do?
Tassal is an Australian seafood producer based in Tasmania. It is the largest producer of Tasmanian grown Atlantic salmon across domestic and international markets.
According to Tassal's FY19 Annual Report, 50.3% of its $551.3 million sales revenue came from the domestic retail market. Domestic wholesale contributed $185.5 (33.6%) million while exports comprised $88.5 million (16.1%).
The group's products fall into four categories: fresh deli, canned, smoked and fresh packaged.
What do the numbers say?
The Tassal share price has fallen 10.1% this year. The company's shares are trading at a price-to-earnings (P/E) ratio of 10.8 right now.
It's hard to get comparable companies given Tassal's unique operations and cost structure. However, a 10.8 P/E could suggest the Aussie salmon producer is a good value buy.
The company's February half-year earnings were well-received by investors. In fact, the Tassal share price soared 9% higher on the back of the strong result.
Total salmon sales fell 14.4% with a 0.6% increase in domestic salmon sales offsetting a 45.9% decrease in exports.
The company forecast positive market dynamics for both salmon and prawns back in February. That was all pre-coronavirus but I think there are still some good signs.
Aussie supermarket sales have been strong as highlighted by growth in the Coles Group Ltd (ASX: COL) updates and share price gains.
There is still plenty of uncertainty around agriculture and aquaculture. However, I think we could see steady demand when Tassal delivers its full-year result in August.
Is the Tassal share price good value?
The Aussie food producer is certainly an interesting company. I like that Tassal is continuing to expand with its strategic investment in De Costi Seafoods.
The company is also looking to diversify away from its salmon-producing roots. That strategy is being largely driven through its investment in the higher-yielding prawn aquaculture industry.
I think Tassal's significant investment in smart-farming could also pave the way to long-term operational efficiency and reduced expenditure.
Foolish takeaway
The numbers suggest that the Tassal share price is reasonably valued. However, I'm not sure the Aussie aquaculture company is a cheap buy.
Much of that potential value will depend on its August full-year earnings and outlook.
