TORM plc Just Missed EPS By 11%: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that TORM plc (CPH:TRMD A) filed its quarterly result this time last week. The early response was not positive, with shares down 6.3% to kr.168 in the past week. Results were mixed, with revenue coming in 29% at US$372m, yet statutory earnings came up 11% short, at US$1.35 per share. 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.

See our latest analysis for TORM

Taking into account the latest results, the current consensus, from the five analysts covering TORM, is for revenues of US$1.25b in 2025. This implies a painful 24% reduction in TORM's revenue over the past 12 months. Statutory earnings per share are expected to nosedive 33% to US$5.02 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.18b and earnings per share (EPS) of US$4.86 in 2025. 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.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of kr.251, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values TORM at kr.286 per share, while the most bearish prices it at kr.216. 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 20% by the end of 2025. This indicates a significant reduction from annual growth of 23% 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 1.1% 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 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. The consensus price target held steady at kr.251, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for TORM going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 4 warning signs for TORM (of which 1 is concerning!) you should know about.

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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.