TORM PLC-A (NASDAQ:TRMD) – A Strong Candidate for GARP Investors

TORM PLC-A (NASDAQ:TRMD) stands out as a compelling pick for investors following the growth-at-a-reasonable-price (GARP) strategy, aligning closely with Peter Lynch’s investment principles. The company operates in the product tanker market, transporting refined petroleum products, and meets key criteria for sustainable growth, financial health, and attractive valuation.

Why TRMD Fits the GARP Approach

• Strong Historical Growth: TRMD has delivered an impressive 5-year average EPS growth of 23.3%, well within Lynch’s preferred range of 15-30%. This indicates consistent earnings expansion without excessive risk of overheating.
• Attractive Valuation: With a PEG ratio of 0.17 (far below Lynch’s threshold of 1), the stock is priced conservatively relative to its growth. The P/E ratio of 3.9 further underscores its undervaluation compared to industry peers.
• Healthy Balance Sheet: The company maintains a debt-to-equity ratio of 0.48, below Lynch’s stricter preference of 0.25 but still signaling prudent leverage. A current ratio of 2.55 confirms strong liquidity to cover short-term obligations.
• High Profitability: TRMD’s return on equity (ROE) of 21.7% exceeds Lynch’s 15% benchmark, reflecting efficient use of shareholder capital.

Fundamental Highlights

TRMD earns a solid 6/10 in our fundamental analysis, with standout ratings in profitability (8/10) and health (7/10). Key strengths include:

• Margins: Gross margin of 71.2% and operating margin of 32.9% rank well above industry averages.
• Dividend Yield: A high 22.2% yield makes TRMD appealing for income-focused investors, though sustainability concerns exist due to a payout ratio near 119%.
• Liquidity & Solvency: Strong quick and current ratios, along with a manageable debt profile, reduce financial risk.

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

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

Disclaimer

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