Has Tomra Systems’ Recent Share Slump Created a New Opportunity in 2025?

If you are mulling over whether to buy, hold, or step aside on Tomra Systems, you are certainly not alone. Over the past few years, the stock has seen its fair share of ups and downs. In the past week, it slipped 2.8%, and it is down 3.8% for the month. Year to date, you are looking at a 1.1% decline. Zoom out, and the numbers paint a rougher picture, with the share price off 4.9% over twelve months and down 22.6% over three years. Even over a five-year stretch, Tomra’s stock is sitting lower by 15.2%. These moves are not just numbers; they are shaped by shifting market sentiment and broader trends in environmental technology, an area Tomra is firmly rooted in.

Despite this bumpy ride, some investors are wondering if there is unrealized potential waiting to shine. Yet, when we size up Tomra's valuation based on standard criteria, the picture is clear: it does not currently look undervalued by any of the usual methods. Tomra scores 0 out of 6 on our valuation checks, which suggests the market is not overlooking any hidden value according to these traditional metrics.

Still, numbers only tell part of the story. Up next, we will dive deeper into these valuation approaches, and later, I will share a sharper perspective on understanding what truly drives Tomra’s value opportunity.

Tomra Systems scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Tomra Systems Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and discounting those values back to today. The goal is to determine what Tomra Systems might truly be worth, based on its ability to generate free cash in the years ahead.

Tomra’s latest reported Free Cash Flow (FCF) is €164.7 million. Looking ahead, analysts provide projections up to 2027, with FCF expected to reach €109.5 million. Projections beyond that are based on reasonable assumptions and extrapolations, with estimates placing Tomra’s FCF at around €54.99 million by 2035. These figures reflect a conservative trajectory for future cash generation.

With this approach, the intrinsic value of Tomra Systems is calculated at €74.32 per share. However, the current market price is significantly higher, making the stock appear 100.1% overvalued relative to its underlying cash flows. According to this DCF analysis, Tomra does not appear to be trading at a bargain based on today’s valuation.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Tomra Systems.

Our Discounted Cash Flow (DCF) analysis suggests Tomra Systems may be overvalued by 100.1%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Tomra Systems Price vs Earnings

The Price-to-Earnings (PE) ratio is a commonly used metric for valuing profitable companies like Tomra Systems, as it offers investors a snapshot of how much they are paying for each unit of earnings today. This makes the PE ratio particularly useful when a company has established and relatively stable earnings, which helps ensure that valuation comparisons are meaningful.

In assessing what constitutes a “normal” or fair PE ratio, it is important to consider a company’s growth potential and risk profile. Companies with faster earnings growth or lower perceived risk often deserve a higher PE ratio, while slower growth or higher risk might warrant a lower multiple. Thus, comparing Tomra’s PE to benchmarks like industry averages and peers can provide context but does not always tell the full story.

Tomra Systems is currently trading at a PE ratio of 36.3x, which is significantly above the Machinery industry average of 24.6x and its peer average of 23.1x. To offer a more tailored perspective, Simply Wall St uses a proprietary “Fair Ratio” that factors in Tomra’s unique growth outlook, profit margins, risk profile, market cap, and industry. For Tomra, the Fair Ratio is calculated at 30.8x. This approach is more comprehensive than just looking at raw peer or industry averages because it aligns the valuation multiple with the specific earnings growth and risk dynamics of Tomra itself.

Since Tomra’s actual PE is moderately higher than its Fair Ratio, this evaluation suggests the stock is overvalued by this measure.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Tomra Systems Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your own story of how you think Tomra Systems' future will unfold, combining what you believe about its business outlook, such as expected revenue and profit growth, with financial forecasts and a fair value that you define.

Narratives help connect the dots between Tomra’s business story and its numbers, empowering you to bridge your view of the company with a calculated estimate of what the shares should be worth. They are accessible and easy to create on Simply Wall St’s Community page, a feature already used by millions of investors to share and compare investment opinions.

With Narratives, you can act confidently when you see how your fair value (based on your assumptions) lines up next to Tomra’s current market price. This may help you decide when to buy or sell. Best of all, Narratives continuously update as fresh information, such as new earnings or breaking news, flows in.

For example, on Tomra Systems, some investors' Narratives see fair value as high as NOK211.29, reflecting optimism about EU-driven growth and innovation, while others put it as low as NOK128.16, focusing on recycling demand risks and regulatory uncertainty.

Do you think there's more to the story for Tomra Systems? Create your own Narrative to let the Community know!

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.

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