Is it a good company at a reasonable price? I bought this company for diversification. It has mostly performed fine. It is doing quite well for the past 5 and 10 years. I plan to keep this stock in my portfolio. The stock price seems relatively expensive at this point.
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 38 years. I bought stock to give portfolio some balance as I had too many financial stocks. Performance has often been mediocre.
When I was updating my spreadsheet, I noticed that I have had this stock for 37 years (since 1985) and I have made 9.29% per year with 6.91% from capital gains and 2.38% from dividends. This is in my Trading Account. I also had this stock in my RRSP account from 1998 to 2000 and made 14.30% per year with 11.84% from capital gains and 2.46% from dividends. I sold this because I had quite a lot invested in this stock.
If you had invested in this company in December 2012, for $1,007.30 you would have bought 35 shares at $28.78 per share. In December 2022, after 10 years you would have received $631.80. in dividends. The stock would be worth $5,406.10. Your total return would have been $6,037.90.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $28.78 | $1,007.30 | 35 | 10 | $631.80 | $5,406.10 | $6,037.90 |
The current dividend yield is low with dividend growth low. The current dividend yield is low (below 2% at 1.61%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.13%, 2.95% and 2.84%. The dividend growth has been low (below 8% per year) at 5.6% per year over the past 5 years.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 65% with 5 year coverage at 30%. The DPR for Adjusted Earnings per Share (ARPS) for 2022 is 70% with 5 year coverage at 106%. The DPR for Cash Flow per Share (CFPS) for 2022 is 43% with 5 year coverage at 48%. The DPR for Free Cash Flow (FCF) for 2022 is 55% with 5 year coverage at 69%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 64.73% | 30.35% |
| AEPS | 69.53% | 106.21% |
| CFPS | 42.53% | 47.98% |
| FCF | 55.30% | 68.50% |
Debt Ratios are fine, but they should improve the Liquidity Ratio. The Long Term Debt/Market Cap Ratio for 2022 is good and low at 0.06. The Liquidity Ratio is very low at 0.57. If you add in Cash Flow after dividends it is just 0.79. The current assets cannot cover the current liabilities. It is only when you add back the current portion of the long term debt, that the ratio is above 1.00 and then it is still low at 1.17. The 5 year median for this ratio is 1.33. It is low, but acceptable. The Debt Ratio is good at 2.21.
The Total Return per year is shown below for years of 5 to 37 to the end of 2022 in CDN$. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 5.56% | 25.51% | 23.03% | 2.48% |
| 2012 | 10 | 6.32% | 21.45% | 18.30% | 3.16% |
| 2007 | 15 | 5.39% | 11.51% | 9.37% | 2.14% |
| 2002 | 20 | 3.73% | 8.64% | 6.73% | 1.92% |
| 1997 | 25 | 4.22% | 7.51% | 5.66% | 1.85% |
| 1992 | 30 | 4.89% | 11.28% | 8.21% | 3.07% |
| 1987 | 35 | 5.36% | 8.91% | 6.59% | 2.32% |
| 1985 | 37 | 5.79% | 9.02% | 6.66% | 2.36% |
The Total Return per year is shown below for years of 5 to 32 to the end of 2022 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 5.22% | 23.63% | 21.17% | 2.46% |
| 2012 | 10 | 3.35% | 17.58% | 14.71% | 2.87% |
| 2007 | 15 | 4.06% | 9.20% | 7.10% | 2.10% |
| 2002 | 20 | 4.74% | 10.68% | 7.54% | 3.14% |
| 1997 | 25 | 4.52% | 8.33% | 5.88% | 2.45% |
| 1992 | 30 | 4.67% | 13.40% | 9.08% | 4.32% |
| 1990 | 32 | 5.37% | 9.51% | 6.62% | 2.89% |
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 18.11, 21.15 and 24.19. The corresponding historical ratios are 18.13, 19.66 and 23.96. The current P/E Ratio is 34.50 based on a stock price of $168.14 and EPS estimate for 2023 of $4.87 ($6.34 US$). The current ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 36.33, 46.37 and 56.40. The corresponding 10 year ratios are 23.93, 30.04 and 35.68. The current P/AEPS Ratio is 38.31 based on a AEPS estimate for 2023 of $3.28 and a stock price of $125.67. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
I get a Graham Price of $57.54 . The 10-year low, median, and high median Price/Graham Price Ratios are 1.72, 2.05 and 2.33. The current P/GP Ratio is 2.92 based on a stock price of $168.14. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 2.47. The current P/B Ratio is 4.12 based on a stock price of $125.67, Book Value of $14,515M, and Book Value per Share of $30.49. The current ratio is 67% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
I also have Book Value per Share estimate for 2023 of $25.50. This implies a ratio of 4.93 based on a stock price of $125.67, and a Book Value of $12,140M. This ratio is 100% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 14.51. The current P/CF Ratio is 24.35 based on Cash Flow per Share estimate for 2023 of $5.16, Cash Flow of $2,456M and a stock price of $125.67. The current ratio is 68% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
I get an historical median dividend yield of 3.05%. The current dividend yield is 1.56% based on dividends of $1.96 and a stock price of $125.67. The current dividend yield is 49% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
I get a 10 year median dividend yield of 3.07%. The current dividend yield is 1.56% based on dividends of $1.96 and a stock price of $125.67. The current dividend yield is 49% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 3.46. The current P/S Ratio is 8.75 based on Revenue estimate for 2023 of $6,839M, Revenue per Share of $14.37 and a stock price of $125.67. The current ratio is 153% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
Results of stock price testing is that the stock price is relatively expensive. The dividend yield tests say this and it is confirmed by the P/S Ratio test. All the testing says the same thing. I did the testing mostly in US$ because this company reports in US$ and the estimates are given in US$.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (4), Hold (8), Underperform (2) and Sell (2). The consensus is a Hold. The 12 month stock price consensus is $177.56 ($132.61 US$). This implies a total return of 7.16% with 5.61% from capital gains and 1.56% from dividends. An Do Not Buy on Stock Chase by Robert Gill says that it is a tremendous business model on paper, but profitability is tepid and has an eye popping P/E.
The company has mixed reviews on Stock Chase. Stock Chase gives this stock 3 stars out of 5. This stock is 82 on the Money Sense list. It is on the Aristocrat list. Robin Brown on Motley Fool says this is a safe dividend stock. Christopher Liew on Motley Fool says to buy this stock for passive income. The company put out a press release on Newswire about their 2022 results. The company put out a press release on Newswire about their 2023 first quarter results.
Simply Wall Street via Yahoo Finance put out a review on this stock. Simply Wall Street put out 2 warnings on this stock of profit margins (16.5%) are lower than last year (25.9%); and significant insider selling over the past 3 months.
Thomson Reuters is the result of the megamerger of Canada's Thomson and the United Kingdom's Reuters Group in 2008. In 2021, Thomson Reuters completed the sale of Refinitiv to LSE Group. Thomson Reuters' three largest segments are its legal professionals, Tax and accounting, and corporates segments. 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 12, 2023 around 5 pm. Tomorrow on my other blog I will write about Investing and Volatility .... learn more on May 11, 2023 around 5 pm.
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