TORM PLC-A (NASDAQ:TRMD) Passes Key Peter Lynch Investment Screen

In the world of long-term investing, few strategies have shown as much staying power as the approach used by Peter Lynch during his time at Fidelity's Magellan Fund. His method, described in One Up on Wall Street, focuses on finding companies with lasting growth paths, fair prices, and good financial condition, often found in businesses that are simple but missed by most analysts. This strategy, called growth at a reasonable price (GARP), stays away from speculative high-fliers for firms that mix growth with careful spending. One company now fitting these points through our Peter Lynch-inspired screen is TORM PLC-A (NASDAQ:TRMD), a worldwide operator of product tankers.

TORM works mainly in moving refined oil products across global markets, running a fleet of about 90 ships set up for clean and dirty petroleum products. The company’s focus on mid-sized tankers (LR2, LR1, and MR classes) places it well within the energy logistics chain, serving refineries and end customers everywhere. From a Lynch view, this is just the sort of "simple" but vital business that can stay unnoticed while doing well in its area.

Several important measures make TRMD notable within the Lynch model. First, its five-year earnings per share (EPS) growth is at 23.3%, safely above Lynch’s lowest bar of 15% and under his higher warning limit of 30%, which tries to remove unstable growth trends. This past record shows a capacity to increase profits significantly over time. Second, the company’s PEG ratio, a Lynch favorite since it puts value next to growth, is very good at 0.28, far under the goal of 1.0. This implies the market might be pricing TRMD too low for its past growth results.

Financial condition, another key part of the Lynch method, seems solid here. The debt-to-equity ratio of 0.46 is under Lynch’s chosen top figure of 0.6, showing a careful capital build that uses more equity than debt. This is supported by a current ratio of 2.57, pointing to good short-term cash flow and a capacity to easily meet needs, a main part for handling industry cycles. Also, the return on equity (ROE) of 15.6% is above Lynch’s 15% mark, showing good use of shareholder money to create profits.

Our basic study report gives TRMD a total score of 6 out of 10, showing a varied but hopeful profile. The company does well in profitability and financial condition, with good margins, stable returns on assets and invested capital, and very good cash flow measures. Its price also looks good compared to industry and wider market standards. However, the study notes worries about growth lasting, with recent earnings and sales drops and negative short-term predictions. Dividend hunters might like the 12.8% yield, though the payout ratio brings up doubts about long-term steadiness. For a full look, readers can see the full fundamental report here.

For investors who follow Lynch’s ideas, TRMD is a strong example of mixing growth with value and steadiness. It works in a key industry that often lacks flash but stays important, has given historically good earnings growth, and keeps a sound balance sheet, all at a price that does not require perfection. The screen that found TRMD is part of a wider push to find such companies; more picks matching this strategy can be seen using our Peter Lynch Stock Screener.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider their financial situation, risk tolerance, and objectives before making any investment decisions.