Tomra Systems (OB:TOM): Evaluating Valuation After Q3 Miss and Poland Deposit Return System Launch

Tomra Systems (OB:TOM) is in the spotlight after its third-quarter update, which showed earnings trailing market expectations, largely due to ongoing softness in Recycling. At the same time, momentum is building with a major order tied to Poland’s new deposit return system.

See our latest analysis for Tomra Systems.

Tomra’s share price has taken a sharp hit in the wake of its Q3 results, falling 24% over the past month and down 21% year-to-date, as investors react to recent earnings misses and headwinds in the Recycling division. Despite the market’s short-term caution, Tomra’s long-term strategy around deposit return systems and strong order intake in newer markets like Poland suggest potential for renewed momentum ahead, even after a one-year total shareholder return of -17.9%.

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With shares sharply lower and forecasts for strong medium-term growth, the key question is whether Tomra’s recent slump means the stock is now undervalued or if the market is already taking the company’s future prospects into account.

Most Popular Narrative: 27% Undervalued

Tomra Systems is trading well below the most widely followed narrative's fair value estimate, with last close at NOK118.5 compared to a projected value of NOK163.26. This gap highlights a significant divergence between current investor sentiment and the future expectations driving the narrative's valuation model.

The upcoming implementation of new deposit return systems in multiple countries, including Poland, Portugal, Spain, Moldova, and ongoing progress in the UK, is set to significantly expand Tomra's addressable market for reverse vending machines and services. This is expected to support strong future revenue growth and higher recurring service revenues.

Read the complete narrative.

Want to know what’s fueling such bullish numbers? The narrative points to bold revenue growth, improving margins, and future profit multiples that could reset expectations for Tomra. Ready to see the exact forecasts redefining this company’s fair value? Dive deeper for the quantitative details behind this market-moving perspective.

Result: Fair Value of $163.26 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, weak order intake in Recycling and continued macroeconomic uncertainty could quickly challenge the bullish outlook if customer investment remains subdued.

Find out about the key risks to this Tomra Systems narrative.

Another View: Are the Ratios Telling a Different Story?

While fair value models highlight Tomra as undervalued, a glance at the price-to-earnings ratio suggests caution. Tomra trades at 30 times earnings, noticeably higher than the industry average of 19.9 and the peer average of 22.6. Even so, it is below the fair ratio of 38, a mark the market may eventually revisit. This raises an important question for investors: will Tomra's premium hold up, or is there risk of a valuation pullback?

See what the numbers say about this price — find out in our valuation breakdown.

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Build Your Own Tomra Systems Narrative

If the consensus view does not align with your thinking, or you want to dig into the numbers yourself, you can easily develop your own take on Tomra in just a few minutes. Do it your way

A great starting point for your Tomra Systems research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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