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, over 35 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 my return is not great, but it is acceptable. I have had this stock for some 35 years and my return is 8.68% per year with 6.02% from capital gains and 2.66% from dividends. People who bought this stock in the last 5 or 10 years have done much better. See chart below.
The dividend yields are low with dividend growth low. The current dividend yield is low (below 2%) at 1.67%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.88%, 3.36% and 2.88%. The dividend growth is low (below 8% per year). The dividend growth over the past 5 years is 2.55% per year. The last dividends increase for 2021 was better at 6.6%. Dividends are paid in US$, so for Canadians, they will fluctuate with the currency exchange.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 68% with 5 year coverage at 41%. The DPR for CFPS for 2020 is 46% with 5 year coverage at 40%. The DPR for Free Cash Flow for 2020 is 59% with 5 year coverage at 65%.
Debt Ratios are good. The long Term Debt/Market Cap Ratio for 2020 is good and low at 0.09. The Liquidity Ratio for 2020 is good at 1.50. The Liquidity Ratio has varied a lot over the years. The Debt Ratio for 2020 is very good at 2.26. The Leverage and Debt/Equity Ratios for 2020 are good at 1.79 and 0.79.
The Total Return per year is shown below for years of 5 to 35 to the end of 2020 in CDN$. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 2.34% | 17.45% | 14.75% | 2.70% |
| 2010 | 10 | 5.19% | 13.58% | 10.84% | 2.74% |
| 2005 | 15 | 4.89% | 8.95% | 6.66% | 2.29% |
| 2000 | 20 | 3.27% | 5.18% | 3.34% | 1.83% |
| 1995 | 25 | 4.09% | 10.20% | 7.05% | 3.16% |
| 1990 | 30 | 4.53% | 9.09% | 6.23% | 2.85% |
| 1985 | 35 | 5.60% | 8.51% | 5.86% | 2.65% |
The Total Return per year is shown below for years of 5 to 30 to the end of 2020 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 2.55% | 19.42% | 16.61% | 2.81% |
| 2010 | 10 | 2.74% | 10.72% | 8.10% | 2.61% |
| 2005 | 15 | 4.46% | 9.55% | 5.99% | 3.56% |
| 2000 | 20 | 4.07% | 6.88% | 4.25% | 2.63% |
| 1995 | 25 | 4.44% | 11.20% | 7.34% | 3.85% |
| 1990 | 30 | 4.20% | 9.08% | 5.89% | 3.19% |
| 1985 | 35 | 5.88% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.64, 19.68 and 23.72. The corresponding 10 year ratios are 14.63, 17.61 and 20.59. The corresponding historical ratios are 18.13, 19.66 and 23.96. The current P/E Ratio is 72.22 based on a stock price of $118.80 and EPS estimate for 2021 of $1.65 ($1.34 US$). This P/E Ratio is above the 10 year high median ratio. This stock price testing suggests that the stock price is relatively expensive. Problem is that analysts think that the EPS will drop more than 40% in 2021. This testing is in CDN$.
If you look at future EPS estimates, for 2022 the P/E Ratio is 48.63 based on EPS estimate of 2.44 (1.99 US$) and for 2023 the P/E Ratio is 33.03 based on EPS estimate of 3.60 ($2.93 US$). These are based on a stock price of $118.80. These P/E Ratios are also above the high median 10 year ratios. This testing is in CDN$.
I get a Graham Price of $30.61. The 10 year low, median, and high median Price/Graham Price Ratios are 1.26, 1.52 and 1.69. The current P/GP Ratio is 3.88 based on a stock price of $118.80. The current ratio is higher than the 10 year high median ratio. This stock price testing suggests that the stock price is relatively expensive. Problem is that analysts think that the EPS will drop more than 40% in 2021 and EPS is part of the Graham Price calculation. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 2.37. The current P/B Ratio is 4.87 based on a stock price of $96.70, Book Value of $9,870M and Book Value per Share of $19.85. The current ratio is 105% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$. The main problem is lack of growth in Book Value.
I get a 10 year median Price/Cash Flow per Share Ratio of 11.74. The current P/CF Ratio is 29.39 based on Cash Flow per Share estimate for 2021 of $3.29, Cash Flow of $1,636M, and a stock price of $96.70. The current ratio is 150% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$. A problem is the lack of growth in Cash Flow.
I get an historical median dividend yield of 3.05%. The current dividend yield is 1.68% based on dividends of $1.62 and a stock price of $96.70. The current dividend yield is 45% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
I get a 10 year median dividend yield of 3.37%. The current dividend yield is 1.68% based on dividends of $1.62 and a stock price of $96.70. The current dividend yield is 50% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 2.56. The current P/S Ratio is 7.75 based on a stock price of $96.70, Revenue estimate for 2021 of $6,199M and Revenue per Share of $12.47. The current ratio is 203% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
Even if I move forward into the future with Revenue estimate for 2022 of $7,948M and for 2023 of $8,343M, the P/S Ratio are still high at 7.43 and 7.08. These ratios are using the stock price of $$96.70. This stock price testing still suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably relatively expensive. All the testing I have done is saying the same thing. Even looking at analysts estimates for 2022 and 2023, the stock price is still showing a relatively expensive.
Is it a good company at a reasonable price? I own this stock and I have made a reasonable return over the years. I still like the company and will continue to hold my shares. However, at the present time, the stock price seems to be on the expensive side.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5), Hold (7), Underperform (1) and Sell (1). The consensus would be a Buy, but the recommendations seem to be all over the place. The 12 month stock price is $123.38 ($100.43 US$). This implies a total return of 5.46% with 3.78% from capital gains and 1.67% from dividends.
The last few analysts’ recommendations on Stock Chase are Buy and Top Pick. Ambrose O'Callaghan on Motley Fool thought this stock was cheap in January 2021. The Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 and lists 3 risks. A writer on Simply Wall Street says this stock has an intrinsic value of $104.85 CDN$. A writer on Simply Wall Street gives a review of this stock as a dividend stock. They are wrong about a dividend cut. It might seem that way to Canadian Investors, but the dividends were not cut, it was just dividends are paid in US$ and they will fluctuate in CDN$. Jing Pan on Income Investors gives a review of this stock as a dividend growth stock.
Thomson Corporation is a leading provider of value-added information and technology to users in the fields of law, tax, accounting, financial services, higher education, reference information, corporate training and assessment, scientific research, and healthcare. Its web site is here Thomson Reuters Corp.
The last stock I wrote about was about was 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 07, 2021 around 5 pm. Something to Buy May 2021.... learn more on Thursday, May 06, 2021 around 5 pm.
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