Growth Investors: Industry Analysts Just Upgraded Their TORM plc (CPH:TRMD A) Revenue Forecasts By 10%

Celebrations may be in order for TORM plc (CPH:TRMD A) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

After the upgrade, the consensus from TORM's five analysts is for revenues of US$1.3b in 2024, which would reflect a not inconsiderable 15% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to dip 2.8% to US$6.98 in the same period. Prior to this update, the analysts had been forecasting revenues of US$1.2b and earnings per share (EPS) of US$7.16 in 2024. While revenue forecasts have increased, the analysts if anything seem a little more pessimistic, given the small dip in earnings per share estimates in this update.

Check out our latest analysis for TORM

The consensus price target was unchanged at US$39.14, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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 US$40.03 and the most bearish at US$38.15 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 15% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 21% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 2.1% annually for the foreseeable future. So it's pretty clear that TORM's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for TORM. Notably, analysts also upgraded their revenue estimates, with sales performing well although TORM's revenue growth is expected to trail that of 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 dilutive stock issuance over the past year. You can learn more, and discover the 3 other risks we've identified, for free on our platform here.

We also provide an overview of the TORM Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.