Is TORM plc a Buy Ahead of Year-End? Evaluating Dividend Strength, Fundamentals, and Technicals

In the realm of value investing, the interplay between financial fundamentals, dividend sustainability, and technical dynamics often defines the attractiveness of an investment. TORM plc (TRMD), a global player in the tanker shipping industry, presents a compelling case study. As 2025 draws to a close, investors must weigh its recent performance against broader industry trends and technical indicators to determine whether the stock warrants a place in a value-oriented portfolio.

Dividend Strength: A Double-Edged Sword

TORM's dividend policy remains a cornerstone of its appeal. The company declared an interim dividend of USD 0.62 per share in Q3 2025, translating to a payout ratio of 78% of net profit. While this high payout ratio signals a strong commitment to shareholder returns, it also raises questions about sustainability amid declining earnings. For instance, TORM's net profit in Q3 2025 fell to USD 77.6 million, down from USD 130.7 million in the same period in 2024. However, the company's CEO, Jacob Meldgaard, emphasized operational efficiency and an integrated operating model as key differentiators, suggesting that cost discipline may mitigate some of the earnings pressure.

From a value investing lens, TORM's dividend appears robust but not without risks. A payout ratio above 70% typically warrants caution, particularly in cyclical industries like shipping. Yet, TORM's ability to secure favorable charters-such as a three-year time charter at USD 22,000 per day-demonstrates pricing power that could stabilize cash flows. Investors must monitor whether the company's fleet optimization strategy, including the acquisition of a 2010-built LR2 vessel and the divestment of older MR ships, enhances long-term earnings potential without overleveraging.

Fundamentals: Attractive Valuation, Moderate Leverage

TORM's financial metrics suggest a compelling value proposition. As of December 5, 2025, the stock trades at a P/E ratio of 7.72, significantly below the broader market average. This low valuation, combined with a debt-to-equity ratio of 0.42, indicates a balance between affordability and prudent leverage. The company's book value per share, currently estimated at USD 18.72, has shown a slight upward trend, reflecting asset optimization efforts.

However, the decline in Q2 2025 net profit to USD 58.7 million (from USD 194.2 million in Q2 2024) underscores the sector's volatility. While TORM has narrowed its full-year 2025 guidance to TCE earnings of USD 875–925 million and EBITDA of USD 540–590 million, these figures represent a contraction from previous years. Value investors must assess whether the company's fleet modernization and chartering strategies can reverse this trend.

Technicals: A Mixed Signal Amid Consolidation

Technical analysis paints a nuanced picture. TRMD's stock has been trading in a horizontal range, with key resistance at USD 21.84 and support at USD 21.13. The 20-day and 50-day SMAs (22.20 and 21.47, respectively) suggest a bearish bias, while the RSI of 44.24 indicates an oversold condition. This divergence hints at potential short-term volatility.

Notably, the stock has surged 38.1% in the last three months, despite trading near its 52-week low of USD 13.60. This resilience could reflect undervaluation or a consolidation phase. For value investors, the proximity to support levels and the oversold RSI may signal a buying opportunity, albeit with caution. The recent 10.42% price increase over 10 days amid rising volume further suggests short-term momentum, though the bearish moving averages caution against over-optimism.

Industry Outlook: Green Shipping and Geopolitical Uncertainties

The shipping industry's trajectory in 2025–2026 is shaped by two competing forces: sustainability-driven growth and geopolitical headwinds. The global green shipping technologies market is projected to grow at a 25.89% CAGR, reaching USD 140.74 billion by 2032, driven by innovations in biofuels and AI-driven logistics. TORM's focus on lifecycle optimization and flexible decarbonization strategies align with these trends, potentially enhancing its long-term competitiveness.

Yet, risks persist. America-first trade policies and retaliatory tariffs could disrupt demand for shipping services, while geopolitical tensions may elevate operational costs. For TORM, the ability to secure favorable charters-such as the USD 30,156-per-day average rate in Q4 2025-will be critical to navigating these uncertainties.

Conclusion: A Calculated Buy for Patient Investors

TORM plc's investment case hinges on its ability to balance dividend sustainability, valuation appeal, and industry tailwinds. While the stock's technical indicators remain mixed and earnings growth has slowed, its low P/E ratio, moderate leverage, and strategic fleet optimization efforts position it as a compelling value play. The shipping sector's pivot toward sustainability further bolsters its long-term prospects.

For value investors with a medium-term horizon, TORM offers an opportunity to capitalize on undervaluation and dividend yield, provided they remain vigilant about earnings volatility and technical signals. As the year-end approaches, a disciplined approach-monitoring key support levels and fleet performance-could unlock upside potential in this cyclical but strategically positioned asset.