A week ago, TORM plc (CPH:TRMD A) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Performance was better than the analysts expected, with revenues of US$499m coming in40% ahead of expectations, and statutory earnings per share (EPS) of US$1.91 exceeding forecasts by 19%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on TORM after the latest results.
Taking into account the latest results, the current consensus, from the five analysts covering TORM, is for revenues of US$1.67b in 2027. This implies an uneasy 13% reduction in TORM's revenue over the past 12 months. Statutory per share are forecast to be US$7.28, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$1.54b and earnings per share (EPS) of US$6.92 in 2027. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Check out our latest analysis for TORM
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of kr.296, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on TORM, with the most bullish analyst valuing it at kr.325 and the most bearish at kr.259 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 10% by the end of 2027. This indicates a significant reduction from annual growth of 12% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 4.0% per year. The forecasts do look bearish for TORM, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards TORM following these results. Fortunately, they also upgraded their revenue estimates, although TORM'sthey are still expected to trail the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for TORM going out to 2028, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 4 warning signs for TORM (1 shouldn't be ignored!) that you should be aware of.
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