- Oops!Something went wrong.Please try again later.
If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can significantly boost your returns by picking above-average stocks. For example, the TORM plc (CPH:TRMD A) share price is up 64% in the last year, clearly besting the market return of around 24% (not including dividends). That's a solid performance by our standards! The longer term returns have not been as good, with the stock price only 14% higher than it was three years ago.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
TORM went from making a loss to reporting a profit, in the last year.
The company was close to break-even last year, so earnings per share of US$0.24 isn't particularly stand out. We'd argue the positive share price reflects the move to profitability. Inflection points like this can be a great time to take a closer look at a company.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on TORM's earnings, revenue and cash flow.
A Different Perspective
Pleasingly, TORM's total shareholder return last year was 64%. That's better than the annualized TSR of 4.5% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. It's always interesting to track share price performance over the longer term. But to understand TORM better, we need to consider many other factors. Be aware that TORM is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
But note: TORM may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on DK exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.