Analysts Are Betting On TORM plc (CPH:TRMD A) With A Big Upgrade This Week

Shareholders in TORM plc (CPH:TRMD A) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

After the upgrade, the four analysts covering TORM are now predicting revenues of US$1.3b in 2022. If met, this would reflect a credible 7.1% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 62% to US$6.46. Before this latest update, the analysts had been forecasting revenues of US$1.1b and earnings per share (EPS) of US$5.96 in 2022. The most recent forecasts are noticeably more optimistic, with a substantial gain in revenue estimates and a lift to earnings per share as well.

Our analysis indicates that TRMD A is potentially undervalued!

Despite these upgrades, the analysts have not made any major changes to their price target of US$33.09, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values TORM at US$245 per share, while the most bearish prices it at US$229. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting TORM's growth to accelerate, with the forecast 15% annualised growth to the end of 2022 ranking favourably alongside historical growth of 5.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 6.8% annually. So it's clear with the acceleration in growth, TORM is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at TORM.

Analysts are clearly in love with TORM at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as a weak balance sheet. You can learn more, and discover the 2 other flags we've identified, for free on our platform here.

You can also see our analysis of TORM's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.