Revenue Beat: TORM plc Exceeded Revenue Forecasts By 24% And Analysts Are Updating Their Estimates

Investors in TORM plc (CPH:TRMD A) had a good week, as its shares rose 4.1% to close at kr.133 following the release of its annual results. Revenues came in at US$1.6b, greatly exceeding expectations even though statutory earnings per share (EPS) of US$6.36 missed forecasts by 3.4%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for TORM

Taking into account the latest results, the five analysts covering TORM provided consensus estimates of US$908.2m revenue in 2025, which would reflect a painful 42% decline over the past 12 months. Statutory earnings per share are expected to dive 57% to US$2.73 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.02b and earnings per share (EPS) of US$3.49 in 2025. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.2% to kr.149. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values TORM at kr.169 per share, while the most bearish prices it at kr.130. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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 42% by the end of 2025. This indicates a significant reduction from annual growth of 22% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 0.8% per year. The forecasts do look bearish for TORM, since they're expecting it to shrink faster than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for TORM. Unfortunately they also cut their revenue estimates for next year. Forecasts imply the business' revenue is expected to perform worse than the wider industry. That said, earnings per share are more important for creating value for shareholders. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of TORM's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for TORM going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 4 warning signs for TORM (1 is potentially serious!) that we have uncovered.

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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.