Thomson Reuters Corp. 2

I own this stock of Thomson Reuters Corp. (TSX-TRI, NYSE-TRI). I bought this stock in 1985. I am following it because I own it. This certainly has not been a spectacular investment. The company I bought was Thomson Corp. It has had its ups and downs. I have had it for some 29 years and my return is 7.22% per year with 3.59% from dividends and 3.63% from capital gains.

When I look at insider trading, I find $2.4M of insider selling and $4M of insider buying with net buying at $1.6M. Recent buying seemed to be in March of this year at just over $38.00.

Not only do insiders have stock options but they have other stock options type vehicles like Deferred Share Units and Restricted Share Units. The Thomson family owns shares in this company via The Woodbridge Company Limited which owns shares in Thomson Reuters valued at around $18B.

There is also some other insider ownership. The CEO owns shares worth around $8.7M and the CFO owns shares worth around $1.9M and an officer owns shares worth around $2.3M. All the insider buying was by Directors and the selling was by officers.

The 5 year low, median and high median Price/Earnings per Share Ratios are 26.72, 31.21and 35.69. These are quite high P/E Ratios and are higher than the 10 year low, median and high median P/E Ratios which are at 20.87, 22.99 and 25.10.

The problem is that EPS has been weak over the past few years, but stock prices did not fall as much as earnings. The current P/E Ratio is 24.92 based on a stock price of $38.29 and 2014 EPS estimate of $1.54 CDN (or $1.40 US$). This stock price test suggests that the stock price is relatively cheap.

I get a Graham Price of $27.06. The 10 year low, median and high median Price/Graham Price Ratios are 1.28, 1.69 and 1.53. The current P/GP Ratio is 1.42 based on a stock price of $38.29. This stock price test suggests that the stock price is relatively reasonable.

The 10 year Price/Book Value per Share is 1.69. The current P/B Ratio is 1.81 based on a stock price of $38.29 and a Book Value per Share of $21.18 CDN$. The current P/B Ratio is higher than the 10 year P/B Ratio by 7%. This stock price test suggests that the stock price is relatively reasonable.

If you use CND$ values, the current dividend yield is 3.78% and the 5 year median dividend yield is 3.77% a value some 0.3% lower. This historical average dividend yield is 3.22% and this is some 18% below the current dividend yield. These stock price tests suggest that the stock price is relatively reasonable.

However, if you historical median dividend yield, it is just 2.79% a value some 36% lower than the current dividend yield is 3.72%. This stock price test suggests that the stock is relatively cheap.

The figures are slightly different using US$ values, but the results are the same. Using US$ values the current dividend yield is 3.72% and the 5 year median dividend yield is 3.49% a value some 6.6% lower. This historical average dividend yield is 3.33% and this is some 12% below the current dividend yield. These stock price tests suggest that the stock price is relatively reasonable.

However, if you historical median dividend yield, it is just 2.83% a value some 31% lower than the current dividend yield is 3.72%. This stock price test suggests that the stock is relatively cheap.

When I look at analysts' recommendations they are all over the place with Strong Buy, Buy, Hold and Underperform Recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $37.70. This implies a total return of 2.24% with 3.78% from dividends and a capital loss of 1.54%. I think that the consensus stock price is out of whack with the recommendations as there are a lot of Hold recommendations for this stock.

A recent article in the Wall Street Journal by Ben Fox Rubin talks about this company's swing to profit with the first quarter of 2014. A recent article in The Wall Street Transcript talks about a collaboration of the National Research Foundation of Korea and Thomson Reuters. The news site of The Street talks about why they rate this company a Hold. In January of 2013, the The Passive Income Earner did a review of this stock.

The stock price testing I did says that the stock is cheap to reasonable. I know that this company is having a current hard time, but I invest for the long term and so I will be holding on to my shares in this company. See my spreadsheet at tri.htm.

This is the second of two parts. The first part was posted on Thursday, May 08, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. The company delivers 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 their revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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