Thomson Reuters Corporation (TSX:TRI) received a lot of attention from a substantial price movement on the TSX in the over the last few months, increasing to CA$60.89 at one point, and dropping to the lows of CA$54.7. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Thomson Reuters’s current trading price of CA$54.86 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Thomson Reuters’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Thomson Reuters
What is Thomson Reuters worth?According to my valuation model, Thomson Reuters seems to be fairly priced at around 18% above my intrinsic value, which means if you buy Thomson Reuters today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth CA$46.39, there’s only an insignificant downside when the price falls to its real value. Furthermore, Thomson Reuters’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What kind of growth will Thomson Reuters generate?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In the upcoming year, Thomson Reuters’s earnings are expected to increase by 25.37%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Thomson Reuters’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on Thomson Reuters, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Thomson Reuters. You can find everything you need to know about Thomson Reuters in the latest infographic research report. If you are no longer interested in Thomson Reuters, you can use our free platform to see my list of over 50 other stocks with a high growth potential.