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Thomson Reuters (TSE:TRI)
TSX:TRI
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Thomson Reuters
(TSX:TRI)
77Outperform
Positive Factors
AI and Technology
Strong results from TRI's CoCounsel 2.0 in the Vals Legal AI Report gives more confidence in its GenAI strategy and the potential for broader industry adoption.
Dividends
The company has increased its dividend by 10%, contributing to a balanced capital allocation strategy.
Revenue Growth
The business is durable as 81% of revenue is recurring and largely recession-resilient.
Negative Factors
Earnings Expectations
The revenue guide for 2025 was slightly below consensus expectations.
Interest Costs
A reduction to adj. EPS was noted to factor in slightly higher-than-expected interest costs and an uptick to depreciation.
User Adoption
Checks continue to find still-limited user adoption of CoCounsel due to a perception of low quality output.
Thomson Reuters (TRI) vs. S&P 500 (SPY)
Market Cap
$106.32B
Dividend Yield1.33%
Average Volume (3M)379.21K
Price to Earnings (P/E)35.2
Beta (1Y)0.55
Revenue Growth8.41%
EPS Growth-14.00%
CountryCA
Employees26,400
SectorIndustrials
Sector Strength63
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)6.72
Shares Outstanding450,096,860
10 Day Avg. Volume300,443
30 Day Avg. Volume379,213
Financial Highlights & Ratios
PEG Ratio6.45
Price to Book (P/B)N/A
Price to Sales (P/S)10.47
Price to Cash Flow (P/CF)36.80
P/FCF Ratio52.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$263.54Price Target Upside13.79% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
Thomson Reuters Business Overview & Revenue Model
Company DescriptionThomson Reuters Corporation provides business information services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates in five segments: Legal Professionals, Corporates, Tax & Accounting Professionals, Reuters News, and Global Print. The Legal Professionals segment offers research and workflow products focusing on legal research and integrated legal workflow solutions that combine content, tools, and analytics to law firms and governments. The Corporates segment provides a suite of content-enabled technology solutions for legal, tax, regulatory, compliance, and IT professionals. The Tax & Accounting Professionals segment offers research and workflow products focusing on tax offerings and automating tax workflows to tax, accounting, and audit professionals in accounting firms. The Reuters News segment provides business, financial, and international news to media organizations, professional, and news consumers through news agency and industry events. The Global Print segment offers legal and tax information primarily in print format to legal and tax professionals, governments, law schools, and corporations. The company was formerly known as The Thomson Corporation and changed its name to Thomson Reuters Corporation in April 2008. The company was founded in 1851 and is headquartered in Toronto, Canada. Thomson Reuters Corporation is a subsidiary of The Woodbridge Company Limited.
How the Company Makes MoneyThomson Reuters generates revenue through a diversified portfolio of subscription-based services, transactional services, and advertising. The company's primary revenue streams include selling information and solutions to legal professionals, tax and accounting firms, and corporations through platforms like Westlaw and Checkpoint. It also earns income from Reuters News by providing content to media organizations and financial institutions, often under long-term contracts. Additionally, Thomson Reuters benefits from strategic partnerships with other technology and data companies, enhancing its offerings and expanding its customer base. The subscription and recurring nature of its services contribute to a steady and predictable revenue flow, while its global reach and expertise in various domains enable it to capitalize on cross-selling opportunities.
Thomson Reuters Financial Statement Overview
Summary
Thomson Reuters exhibits strong financial health with robust profitability and consistent revenue growth. The company's balance sheet shows effective leverage management, while cash flow generation remains solid. These factors together highlight the company's strong financial position and growth potential.Income Statement
Thomson Reuters has demonstrated strong revenue growth, with a 6.83% increase from 2023 to 2024. The company maintains a healthy gross profit margin of 79.32% and a net profit margin of 30.45% for 2024, indicating excellent profitability. EBIT and EBITDA margins are also robust at 29.05% and 42.05%, respectively. Overall, the income statement reflects strong financial performance and efficiency.88
Very Positive
Balance Sheet
The company's balance sheet shows a moderate debt-to-equity ratio of 0.26, suggesting prudent use of leverage. Return on equity is strong at 18.41%, reflecting effective use of shareholder funds to generate profit. The equity ratio stands at 65.12%, indicating a solid portion of assets financed by equity. While the balance sheet is stable, there is room for improvement in asset utilization.75
Positive
Cash Flow
Thomson Reuters reports a free cash flow growth rate of 2.95% from 2023 to 2024, indicating consistent cash generation. The operating cash flow to net income ratio is 1.11, and the free cash flow to net income ratio is 0.84, demonstrating efficient cash management. Overall, the cash flow statement reflects strong liquidity and sound financial management.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 7.26B | 6.79B | 6.63B | 6.35B | 5.98B | Gross Profit |
| 5.76B | 2.70B | 4.22B | 3.87B | 3.71B | EBIT |
| 2.11B | 2.33B | 1.83B | 1.24B | 1.93B | EBITDA |
| 3.05B | 2.95B | 3.01B | 2.02B | 2.76B | Net Income Common Stockholders |
| 2.21B | 2.69B | 1.89B | -553.00M | 1.69B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.89B | 1.36B | 1.27B | 886.00M | 2.40B | Total Assets |
| 18.44B | 18.68B | 21.71B | 22.15B | 17.88B | Total Debt |
| 3.08B | 3.54B | 4.76B | 3.79B | 3.77B | Net Debt |
| 1.22B | 2.34B | 3.69B | 3.01B | 1.99B | Total Liabilities |
| 6.43B | 7.62B | 9.76B | 8.31B | 7.90B | Stockholders Equity |
| 12.01B | 11.06B | 11.95B | 13.83B | 9.98B |
| Cash Flow | Free Cash Flow | |||
| 1.85B | 1.80B | 1.32B | 1.29B | 1.24B | Operating Cash Flow |
| 2.46B | 2.34B | 1.92B | 1.77B | 1.75B | Investing Cash Flow |
| 680.00M | 3.51B | -462.00M | -504.00M | -138.00M | Financing Cash Flow |
| -2.46B | -5.63B | -1.16B | -2.27B | -644.00M |
Thomson Reuters Technical Analysis
Negative
231.61
Price Trends
247.63
Negative
239.26
Negative
232.86
Positive
Market Momentum
-0.25
Positive
53.76
Neutral
77.43
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TRI, the sentiment is Negative. The current price of 231.61 is below the 20-day moving average (MA) of 246.30, below the 50-day MA of 247.63, and below the 200-day MA of 232.86, indicating a neutral trend. The MACD of -0.25 indicates Positive momentum. The RSI at 53.76 is Neutral, neither overbought nor oversold. The STOCH value of 77.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:TRI.
Thomson Reuters Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Performance Comparison
TSE:TRI
Thomson Reuters
231.61
24.62
11.89%
GIB
CGI
96.92
-10.03
-9.38%
OTEX
Open Text
23.04
-12.95
-35.98%
BB
BlackBerry
2.96
-0.14
-4.52%
SHOP
Shopify
78.82
3.90
5.21%
TSE:TCS
TECSYS Inc. J
37.07
-2.05
-5.24%
Thomson Reuters Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -2.17% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with significant growth in organic revenue and successful capital allocation strategies, including strategic acquisitions and share repurchases. Despite some challenges in transactions, print, and Reuters News revenues, the company has shown resilience and adaptability, particularly with its focus on AI innovation and increased revenue growth targets for the future.Highlights
Strong Organic Revenue Growth
Full-year organic revenue grew 7%, up from 6% in the prior year. The big three segments accelerated, growing 9% for the year versus 7% in 2023.
Generative AI Offerings and Product Innovation
Continued strong momentum from generative AI offerings, including Westlaw Precision and Co-Counsel. Several important product launches featuring generative AI capabilities, and significant investments in AI growing to more than $200 million in 2024.
Successful Capital Allocation and Acquisitions
Completed the monetization of LSIC stake, repurchased $639 million of shares, and raised the common dividend by 10% for the fourth consecutive year. Invested approximately $1.6 billion in five acquisitions.
Positive Financial Performance Metrics
Adjusted earnings per share for the year was $3.77 compared to $3.51 per share in the prior year. Fourth-quarter organic revenues grew by 5%, with a 2% increase in adjusted EBITDA to $718 million.
Increasing Revenue Growth Targets
Guidance for organic revenue growth of 7% to 7.5% in 2025 and updating the financial framework for 2026 to 7.5% to 8%. Raised 2026 revenue growth targets for each big three segments by 1%.
Lowlights
Decline in Transactions and Print Revenue
Transactions revenue decreased 4%, while print revenues declined 6% in the fourth quarter, in line with expectations.
Reuters News Revenue Decline
Reuters News organic revenue decreased 3% for the quarter, impacted by a difficult comparison to the prior year period due to significant transactional generative AI licensing revenue.
Lower EBITDA Margin Due to Investments
Fourth-quarter adjusted EBITDA margin declined by 130 basis points to 37.6%, due to investments and higher incentive compensation costs.
Company Guidance
In the call, Thomson Reuters Corporation provided detailed guidance and performance metrics for 2024 and the outlook for 2025 and beyond. The company reported a 7% organic revenue growth in 2024, up from 6% in the previous year, with the big three segments experiencing a 9% increase compared to 7% in 2023. Free cash flow was noted at just over $1.8 billion. The company highlighted strong adoption of generative AI products like Westlaw Precision and Co-Counsel, contributing to double-digit growth in various product lines. For 2025, Thomson Reuters expects organic revenue growth between 7% and 7.5%, and for 2026, it anticipates growth of 7.5% to 8%, raising revenue growth targets for the big three segments by 1%. The adjusted EBITDA margin for 2024 was 38.2%, with an adjusted EPS of $3.77, and the company plans to raise its dividend by 10% in 2025. Investments in AI exceeded $200 million in 2024, and strategic acquisitions were pursued, including SafeSend, expected to contribute $60 million in 2025 revenue.Thomson Reuters Corporate Events
Private Placements and FinancingBusiness Operations and StrategyRegulatory Filings and Compliance
Thomson Reuters Completes Note Exchange and Plans New Prospectus
Positive
Mar 18, 2025
Thomson Reuters announced the completion of its exchange offers and consent solicitations for certain series of notes, aimed at optimizing its capital structure. The exchange allows holders of old notes to receive new notes issued by TR Finance LLC, a subsidiary, with similar financial terms. This move is expected to align revenue generation with indebtedness and improve the company’s financial flexibility. The company also plans to file a new base shelf prospectus to update guarantees and reflect changes in its financial arrangements.
Private Placements and FinancingBusiness Operations and Strategy
Thomson Reuters Optimizes Capital Structure with Debt Exchange Offers
Neutral
Mar 10, 2025
Thomson Reuters announced that its subsidiary, TR Finance LLC, has filed a final prospectus for the exchange of old notes for new notes, as part of efforts to optimize its capital structure. The exchange offers aim to align revenue generation with indebtedness and provide existing note holders with similar financial terms. Additionally, the company is soliciting consents to amend indentures governing the old notes, which could result in reduced protections for note holders. The proposed amendments are expected to be approved, assuming sufficient consents are received.
M&A TransactionsDividendsBusiness Operations and StrategyFinancial Disclosures
Thomson Reuters Achieves Strong 2024 Results and Strategic Acquisitions
Positive
Feb 6, 2025
Thomson Reuters reported a positive financial performance for the fourth quarter and full year of 2024, with organic revenue growth of 7% for the year and 5% for the quarter. The company met its financial targets, increased its annualized dividend per share by 10%, and acquired SafeSend to enhance its tax automation capabilities. Looking forward, it anticipates continued growth in organic revenue and adjusted EBITDA margin in 2025 and beyond. The company remains committed to shareholder value creation by reallocating capital and pursuing strategic acquisitions, which have strengthened its portfolio and growth prospects.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.