Friday, June 1, 2012

Thomson Reuters Corp

Reply to Mike about making money currently. See comments blog.

I own this stock of Thomson Reuters Corp (TSX-TRI, NYSE-TRI). I have owned this stock in my trading account since 1985. I have made a return of some 6.83% per year with 3.94% dividend return and 2.89% capital gain. Not a great showing. However, this stock probably should be considered to be an American stock and the S&P 500 is only up 6.66% over this period.

The other problem I have in making money on this stock is that the Canadian currency has risen significantly against the US$. The growth of the CDN$ against the US$ over the past 10 years is a 36% rise. This company has done better in US$ terms than in CDN$ terms, but unfortunately for me it is only CDN$ terms that count.

Currency risk is the problems with investing in foreign stocks, or Canadian stock where most of their money is made outside Canada. This company reports in US$ as this company is making a significant percentage of their returns in US$. They make money in all the continents.

As far as dividends go, I have had 5 and 10 year grow at the rate of 4% and 1.2% per year over the past 5 and 10 years. In US$ terms, and dividend s are paid in US$, the growth in dividends is at 7.1% and 5.9% per year.

Total return over the past 5 and 10 years is negative in CDN$, but in US$ it is only negative for the last 5 years. Over the past 10 years, in US$ terms, the total return would be around 2% per year.

Over the last 5 and 10 years Revenue per share has grown at the rate of 0% and 7.1% per year in CND$ terms, but at the rate of 3.8% and 10% in US$ terms.

Since this company had negative earnings for 2011 there was no growth. However, earnings are expected to return in 2012 and 5 and 10 year growth to be 3.7% and 8% per year by the end of 2012. Also, I have been tracking the EPS since 1992 and this is the first year of negative earnings.

As far as cash flow goes, there has been no growth over the 5 and 10 years in CDN$ and only slight in US$. However, since I have been tracking this stock in a spreadsheet since 1992, there has been no years of negative cash flow.

The current Liquidity Ratio is low 0.85, but not as low as the 5 year median ratio of 0.80. However, the company has strong cash flow to make up for this. The Debt Ratio at 2.07 is very good, but not quite as high as the 5 year median of 2.27. Both the Leverage and Debt/Equity Ratios are good at 1.98 and 0.96, respectively.

There is, of course, no Return on Equity Ratio for this stock as the earnings for 2011 were negative. However, the 5 year median ROE is low at 7%. The ROE based on Comprehensive Income is even lower at a 5 year median of 4.24%

Book value has also grown better in US$ terms than CDN$ terms, with Book Value growth in CDN$ terms at 1% and 0% over the past 5 and 10 years.

I will continue to hold on to my shares in the company. I had bought it for its foreign exposure and therefore for diversification. The need has not gone away and there is no similar company that I like better than this one.

Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Thomson and Reuters amalgamated in 2008. Its web site is here Thomson Reuters. See my spreadsheet at tri.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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