TORM PLC-A (NASDAQ:TRMD) – A GARP Candidate in the Tanker Industry

TORM PLC-A (NASDAQ:TRMD) emerged from our Peter Lynch-inspired screen as a potential candidate for growth at a reasonable price (GARP) investors. The company operates in the product tanker market, transporting refined petroleum products. TRMD stands out for its strong profitability, healthy balance sheet, and attractive valuation, despite recent earnings volatility.

Why TRMD Fits the Peter Lynch Criteria

• Sustainable Growth: TRMD has delivered a 5-year average EPS growth of 23.3%, aligning with Lynch’s preference for steady but not excessive growth (15-30% range).
• Reasonable Valuation: The stock trades at a P/E of 3.5, well below industry and S&P 500 averages. Its PEG ratio (past 5 years) is negative due to recent earnings declines, but its historical growth suggests potential for re-rating if earnings stabilize.
• Strong Profitability: With an ROE of 21.7%, TRMD outperforms 85% of its peers in the Oil, Gas & Consumable Fuels industry. Margins are robust, including a 32.2% profit margin.
• Healthy Financials: The company maintains a conservative debt profile (Debt/Equity of 0.48) and solid liquidity (Current Ratio of 2.55), reducing financial risk.
• Dividend Appeal: TRMD offers a high 28.8% dividend yield, though sustainability concerns exist given its payout ratio of 119%.

Key Risks

• Earnings Decline: Analysts expect EPS to drop 48.9% annually in coming years, reflecting cyclical pressures in shipping rates.
• Dividend Sustainability: The high payout ratio may not be sustainable if earnings weaken further.

For a deeper dive, review the full fundamental analysis of TRMD.

Our Peter Lynch Strategy screener lists more stocks meeting these criteria and is updated regularly.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own research before making investment decisions.