Wednesday, May 20, 2015

Thomson Reuters Corp. 2

On my other blog I am today writing about my portfolio withdrawal experience continue...

Sound bite for Twitter and StockTwits is: Current Price seems reasonable. I plan to hold on to this stock as a need it for diversification. I made most of my money so far in banks and utilities. You have to wonder about the long term viability of utility stocks. See my spreadsheet at tri.htm.

I own this stock of Thomson Reuters Corp. (TSX-TRI, NYSE-TRI). I bought this stock in 1985 so I have had it for a very long time, almost 30 years. I bought stock to give portfolio some balance as I had too many financial stocks. Performance has been mediocre. I have made a total return of 7.71% per year with 4.42% from capital gains and 3.29% from dividends. These figures are in Canadian dollars.

Over the past year in insider trading there was some $7.8M in insider selling and $7.6M in net insider selling. There was some insider buying, but not much. Insider selling was some 0.02% of the market cap and so relatively small.

As for insider ownership, the Thomson family through The Woodbridge Company Limited owns some 57% of this company which is worth just over $21B. Also, the CEO owns shares worth around $11.3M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.61, 15.54 and 17.47. The corresponding 10 year ratios are higher at 16.72, 18.82 and 21.18. The current P/E Ratio is 30.39 based on a stock price of $49.27 and 2015 EPS of $1.62 CDN$ ($1.35 US$). This stock price testing suggests that the stock price is relatively high.

However, if you look at the Price/Adjusted EPS, they are at 17.29, 19.74 and 22.19 over the 5 year range. The current P/AEPS is 20.51 based on a stock price of $49.27 and 2015 AEPS estimate of $2.40 CDN$ ($2.00 US$). This stock price testing suggests that the stock price is relatively reasonable.

I get a 10 year Price/Book Value per Share Ratio of 1.69 and the current P/B Ratio 2.45, a value some 45% above the 10 year P/B Ratio. The current P/B Ratio is based on a stock price of $49.27 and 2014 BVPS of $20.06 CDN$. This stock price testing suggests that the stock price is relatively high. Using US$ value gives similar results.

If you do stock price testing using dividend yield, the stock price looks reasonable. The current dividend yield is 3.27%. This historical average and median dividends are 3.25% and 3.06%. These values are slightly lower than the current dividend yield. This stock price testing suggests that the stock price is relatively reasonable. Using US$ value gives similar results.

When I look at analysts’ recommendations, I find Buy, Strong Buy and Hold recommendations. The vast majority of the recommendations are a hold, so the consensus would be a Hold. The 12 month consensus stock price is $42.10 in US$. This would be $50.56 in CDN$ at current exchange rates. This implies a total return of 5.89% with 3.27% from dividends and 2.62% from capital gains.

Joseph Solitro of the Motley Fool thinks that Thomson Reuters’ current weakness represents a buying opportunity. Richard Blackwell writing in the Globe & Mail says that Thomson Reuters has been hit by currency headwinds. He is talking about the strong US dollar. Thomson Reuters has announced that it will repurchases up to $1B of shares by the end of next year.

This is the second of two parts. The first part was posted on Tuesday, May 19, 2015 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. Thomson and Reuters amalgamated in 2008. Its web site is here Thomson and 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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