After reading Thomson Reuters Corporation’s (TSX:TRI) most recent earnings announcement (31 March 2018), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Thomson Reuters’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Thomson Reuters
Were TRI’s earnings stronger than its past performances and the industry?
I look at data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to assess different companies in a uniform manner using the most relevant data points. For Thomson Reuters, its most recent earnings (trailing twelve month) is US$1.41B, which, against the prior year’s figure, has jumped up by 28.02%. Since these figures are fairly nearsighted, I have determined an annualized five-year figure for Thomson Reuters’s earnings, which stands at US$843.75M This suggests that, generally, Thomson Reuters has been able to steadily raise its net income over the last couple of years as well.How has it been able to do this? Let’s see if it is merely owing to industry tailwinds, or if Thomson Reuters has seen some company-specific growth. In the past few years, Thomson Reuters expanded bottom-line, while its top-line fell, by effectively managing its costs. This has led to to a margin expansion and profitability over time. Inspecting growth from a sector-level, the Canadian capital markets industry has been growing, albeit, at a subdued single-digit rate of 7.24% over the previous year, and a substantial 17.74% over the past half a decade. This means whatever tailwind the industry is profiting from, Thomson Reuters is able to leverage this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Thomson Reuters to get a more holistic view of the stock by looking at:
- 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.
- 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.
- 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.