Assessing Thomson Reuters Corporation’s (TSX:TRI) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess TRI’s latest performance announced on 30 September 2017 and evaluate these figures to its historical trend and industry movements. View our latest analysis for Thomson Reuters
Despite a decline, did TRI underperform the long-term trend and the industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to examine different companies on a more comparable basis, using the latest information. For Thomson Reuters, its most recent trailing-twelve-month earnings is $1,075.0M, which, in comparison to the previous year’s level, has plunged by -1.65%. Since these values may be somewhat nearsighted, I’ve determined an annualized five-year value for Thomson Reuters’s net income, which stands at $809.0M. This shows that, on average, Thomson Reuters has been able to improve its earnings over the past few years.What’s the driver of this growth? Let’s take a look at if it is only due to industry tailwinds, or if Thomson Reuters has seen some company-specific growth. Over the past couple of years, Thomson Reuters expanded bottom-line, while its top-line declined, by efficiently controlling its costs. This brought about to a margin expansion and profitability over time. Looking at growth from a sector-level, the Canadian capital markets industry has been relatively flat in terms of earnings growth over the prior twelve months, levelling off from a notable 14.59% over the last five years. This means any near-term headwind the industry is facing, it’s hitting Thomson Reuters harder than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research Thomson Reuters to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for TRI’s future growth? Take a look at our free research report of analyst consensus for TRI’s outlook.
- 2. Financial Health: Is TRI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.