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 always been mediocre.
When I was updating my spreadsheet, I noticed a lot of red on my spreadsheet. The only reason the EPS looks good is because of earnings from discontinued business. The same thing occurred in 2017 also.
Dividend yields are in the moderate range (2% to 4% ranges). The current dividend yield is 2.33%, with 5, 10 and historical yields at 3.40%, 3.50% and 3.28%. The dividend increases were always in the low range (less than 8%). See the charts below. Dividends have been paid in US$ since 1989.
The Dividend Payout Ratios are acceptable. The Dividend Payout Ratio for 2018 was 26% with a 5 year coverage of 70% in US$. The 2018 is low because of earnings from discontinue operations. The 5 year coverage gives a better idea. The 2019 DPR is expected to be around 305% with 5 year coverage at 80%. The DPR for CFPS for 2018 is 135% with 5 year coverage at 56%.
Debt Ratios are all good this year. Long Term Debt/Market Cap Ratio is good at 0.13. The Liquidity Ratio is good at 1.84 and is probably the best it has ever been. The 5 and 10 year median Liquidity Ratios are 0.79 and 0.81. The Debt Ratio is good at 2.18. The 5 year median is 1.92. Leverage and Debt/Equity Ratios are also good at 1.85 and 0.85 with 5 year median ratios at 1.94 and 0.94.
The Total Return per year is shown below for years of 5 to 33 to the end of 2018 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
It would generally been the case that Canadian shareholders have done better in CDN$ than US shareholders in US$.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 4.25% | 13.65% | 8.30% | 5.34% |
| 2008 | 10 | 3.51% | 9.34% | 5.33% | 4.00% |
| 2003 | 15 | 3.50% | 4.54% | 1.61% | 2.92% |
| 1998 | 20 | 2.83% | 5.80% | 2.68% | 3.11% |
| 1993 | 25 | 4.16% | 9.50% | 5.35% | 4.15% |
| 1988 | 30 | 4.55% | 7.88% | 4.41% | 3.47% |
| 1985 | 33 | 5.39% | 7.81% | 4.45% | 3.36% |
The Total Return per year is shown below for years of 5 to 28 to the end of 2018 in US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 0.97% | 7.48% | 1.06% | 4.87% |
| 2008 | 10 | 2.52% | 5.93% | 3.20% | 4.28% |
| 2003 | 15 | 4.44% | 3.79% | 0.60% | 3.19% |
| 1998 | 20 | 4.03% | 6.26% | 2.81% | 3.45% |
| 1993 | 25 | 4.68% | 8.91% | 4.84% | 4.07% |
| 1990 | 28 | 4.60% | 6.97% | 3.64% | 3.34% |
| 1985 | 33 | 5.95% |
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 median ratios are 17.09, 19.08 and 21.07. The historical median ratios are 4.81, 18.94 and 23.32. The current P/E Ratio is 129.94 based on a stock price of $82.20 and 2019 EPS estimate of $0.63 CDN$ (or $0.47 US$). This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $18.79 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 1.19, 1.43 and 1.60. The current P/GP Ratio is 4.38 based on a stock price of $82.20 CDN$. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 1.93 US$. The current P/B Ratio is 3.40 based on a stock price of $61.84, Book Value of $9,226 and Book Value per Share of $18.18 in US$. The current ratio is some 76% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 3.28% US$. The current dividend yield is 2.33% based on dividends of $1.44 and a stock price of $61.84 US$. The current yield is some 29% below the historical median yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 2.31 US$. The current ratio is 5.23 based on a stock price of $61.84, 2019 Revenue estimate of $5,933M and Revenue per Share of $11.83 in US$. The current ratio is some 127% above the 10 year median ratio.
Results of stock price testing is that the stock price is probably expensive. All my stock price testing is showing the stock to be relatively expensive.
A big problem is that EPS was higher in the past. However, for both 2017 and 2018, a big part of EPS came from discontinued operations. For 2018 the break was $0.27 for continued operations and $5.64 for discontinued operations. For 2017 the break was $0.88 for continued operations and $1.06 for discontinued operations. Another thing is that the EPS estimates and Net Income estimates do not even come close to matching up. On the other hand, all the stock price testing I did show that the stock price is relatively expensive.
When I look at analysts’ recommendations, I find Buy (7) and Hold (9) recommendations. The consensus would be a Hold. The 12 month stock price consensus is $58.33 US$ or $78.51 CDN$. For Canadians this implies a total loss of 2.13% with a capital loss of 4.49% and dividends of 2.36%.
See what analysts are saying on Stock Chase. They think it has risen too fast and is currently rather expensive. Amy Legate-Wolfe on Motley Fool thinks it is a steady stock with decent dividends. A writer on Simply Wall Street finds the ROCE of this company uninspiring. David Scanlan in an article on Financial Post says that the company is returning to its roots. David Jagielski on Bay Street thinks it is time to sell this stock.
Thomson Reuters Corp is the result of the $17.6 billion megamergers of Canada's Thomson and the United Kingdom's Reuters Group in 2008. It has three main segments: financial and risk (54% of revenue), legal (30% of revenue), and tax and accounting (13% of revenue). Its web site is here Thomson Reuters Corp.
The last stock I wrote about was about WSP Global Inc. (TSX-WSP, OTC-WSPOF) ... learn more. The next stock I will write about will be McCoy Global Inc (TSX-MCB, OTC-MCCRF) ... learn more on Friday, May 3, 2019 around 5 pm. Tomorrow on my other blog I will write about Gluskin Sheff.... learn more on May 02, 2019 around 5 pm.
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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