Is it a good company at a reasonable price? I still like this company, although it has gone through a number of reorganizations over the years. I bought it for diversification and I keep it for that reason. I have found that purchase price does matter for long term investments returns, so I do like to pay at least a reasonable price.
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 this stock to give portfolio some balance as I had too many financial stocks. I plan to hold on to my shares, but I have enough and will not be buying anymore.
When I was updating my spreadsheet, I noticed I have had this stock for 35 years and I have made a total return of 8.78% per year with 6.19% from capital gains and 2.59% from dividends. I like long term stock hold that produced a total return of 8% or more per year.
If you had invested in this company in December 2011, $1007.51 you would have bought 37 shares at $27.23 per share. In December 2021, after 10 years you would have received $628.77 in dividends. The stock would be worth $5,596.99. Your total return would have been $6,225.76.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $27.23 | $1,007.51 | 37 | 10 | $628.77 | $5,596.99 | $6,225.76 |
The dividend yields are low with dividend growth low. The current dividend yield is low (below 2%) at 1.84%. The 5, 10 and historical median dividend yields are moderate (2% to 4% ranges) at 2.38%, 3.16% and 2.86%. Dividend growth is low (below 8% per year) at 3.56% per year over the past 5 years.
The Dividend Payout Ratios (DPR) could be improved. The DPR for EPS for 2021 is 14.09% with 5 year coverage at 30%. The company also provides an Adjusted Earnings per Share (AEPS). The DPR for AEPS for 2021 is 83% with 5 year coverage at 103%. The DPR for Cash Flow per Share (CFPS) is 84% with 5 year coverage at 47%. This is high and I would prefer the DPR for CFPS be 40% or less. The DPR for Free Cash Flow (FCF) for 2021 is 57% with 5 year coverage at 70%.
Debt Ratios are fine, but Liquidity Ratio should be improved. The Long Term Debt/Market Cap Ratio for 2021 is good and low at 0.07. The Liquidity Ratio for 2021 is 0.95. If you add in Cash Flow after dividends it is still low at 1.33. This is a vulnerability. The Debt Ratio for 2021 is 2.66. The Leverage and Debt/Equity Ratios are good at 1.60 and 0.60.
The Total Return per year is shown below for years of 5 to 36 to the end of 2021 in CDN$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 2.37% | 23.08% | 20.81% | 2.27% |
| 2011 | 10 | 5.09% | 21.79% | 18.71% | 3.09% |
| 2006 | 15 | 4.75% | 9.73% | 7.90% | 1.83% |
| 2001 | 20 | 3.11% | 7.59% | 5.87% | 1.72% |
| 1996 | 25 | 3.94% | 9.40% | 7.14% | 2.27% |
| 1991 | 30 | 4.62% | 10.50% | 7.78% | 2.73% |
| 1986 | 35 | 5.35% | 8.37% | 6.28% | 2.10% |
| 1985 | 36 | 5.54% | 9.12% | 6.79% | 2.33% |
The Total Return per year is shown below for years of 5 to 31 to the end of 2021 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 3.56% | 24.58% | 22.27% | 2.31% |
| 2011 | 10 | 2.71% | 19.05% | 16.15% | 2.90% |
| 2006 | 15 | 4.15% | 9.27% | 7.31% | 1.96% |
| 2001 | 20 | 4.28% | 9.76% | 7.11% | 2.65% |
| 1996 | 25 | 4.36% | 10.24% | 7.45% | 2.79% |
| 1991 | 30 | 4.35% | 10.26% | 7.42% | 2.83% |
| 1990 | 31 | 5.68% | 9.80% | 7.01% | 2.79% |
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 16.62, 19.63 and 23.72. The current P/E Ratio is 26.69 based on a stock price of $123.61 and EPS estimate for 2022 of $4.63 ($3.62 US$). The current P/E is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I also have Adjusted Earning Per Share. The 5 year low, median, and high median P/AEPS Ratios are 36.33, 46.37 and 54.40. The corresponding 10 year ratios are 19.19, 22.18 and 25.17. The current P/AEPS Ratio is 39.02 based on AEPS estimate for 2022 of $2.44 and a stock price of $95.20. This ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
I get a Graham Price of $61.07. The 10 year low, median, and high median Price/Graham Price Ratios are 1.19, 1.34 and 1.53. The current P/GP Ratio is 2.02 based on a stock price of $123.61. The current ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 2.46. The current P/B Ratio is 3.37 based on a Book Value of $13,834M, Book Value per Share of $28.23 and a stock price of $95.20. The current ratio is 37% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
I also have an estimate for the Book Value per Share for 2022. I get a 10 year median Price/Book Value per Share Ratio of 2.46. The P/B Ratio for 2022 is 3.10 based on a Book Value of $14,923, Book Value per Share estimate for 2022 of $30.70 and a stock price of $95.20. The current ratio is 26% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 12.89. The current P/CF Ratio is 25.05 based on Cash Flow per Share estimate for 2022 of $3.80, Cash Flow of $1,847M and a stock price of $95.20. The current ratio is 94% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
I get an historical median dividend yield of 2.86%. The current dividend yield is 1.84% based on a dividend of $2.28 ($1.78 US$) and a stock price of $123.61. The current dividend yield is 36% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get an historical median dividend yield of 3.22%. The current dividend yield is 1.87% based on a dividend of $1.78 and a stock price of $95.20. The current dividend yield is 41% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$. (The slight difference in CDN$ and US$ yield is because of the exchange rate and the US and CDN markets are not always exactly in sync.)
The 10 year median Price/Sales (Revenue) Ratio is 2.72. The current P/S Ratio is 6.92 based on Revenue estimate for 2022 of $6,687M, Revenue per Share of $13.76 and a stock price of $95.20. The current P/S Ratio is 155% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
Results of stock price testing is that the stock price probably relatively expensive. All the tests, including the dividend yield and P/S Ratio tests are showing the stock price as expensive.
Last year I also said that the results of stock price testing were that the stock price was 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.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5), Hold (7) and Sell (1). The consensus would be a Buy. The 12 month target price is $152.66 ($119.34 US$). This implies in CDN$ a total return of 25.34% with 23.50% from capital gains and 1.84% from dividends based on a stock price of $123.61.
When I looked at analysts’ recommendations last year, I found 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 based on a stock price of $118.80. What happened was a stock price increase to the current level of $123.61 which implies a total return of 5.72% with 4.05% from capital gains and 1.67% from dividends. However, the stock was much higher at year end at $151.27 and has dropped by 18% so far this year. All indexes are down this year.
Analysts on Stock Chase like this company, but one says hold because of recent restructuring. Stock Chase gives this stock 4 stars out of 5. Christopher Liew on Motley Fool says while TRI isn’t a high flyer, the dividend should be safe and sustainable. Adam Othman on Motley Fool thinks that if you own this stock, it would be a great time to add to your stake. The company, in a Press Release talk about their fourth quarter. The company, in a Press Release talk about their first quarter of 2022. There is a Simply Wall Street report on this company on Yahoo Finance.
Thomson Reuters Corp is a provider of business information services. It operates through five segments: Legal Professionals, Corporates, Tax & Accounting Professionals, Reuters News and Global Print. 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 Wednesday, May 11, 2022 around 5 pm. Tomorrow on my other blog I will write about Stocks for May.... learn more on Tuesday, May 10, 2022 around 5 pm.
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