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Thomson Reuters Corp TRI

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Economic Moat




Thomson Reuters Lowers Guidance in Face of Economic Headwinds

Colin Plunkett, CFA Equity Analyst

Analyst Note

| Colin Plunkett, CFA |

Narrow-moat Thomson Reuters generated year-over-year organic revenue growth of 2% this quarter. Excluding its less material businesses and focusing on the “Big 3” segments of legal, corporate, and tax, the company generated organic revenue growth of 4%, a slight sequential decrease from the previous quarter leading to adjusted earnings of $0.48 per share, a 33% improvement from a year ago. Given the economic slowdown, Thomson Reuters lowered 2020 fiscal guidance. Previously, the company had anticipated organic revenue growth in the range of 4%-4.5% and free cash flow of $1.2 billion. Now, the company expects organic revenue growth of 0%-1% and free cash flow of $1 billion. We are lowering our fair value estimate to $60 per share from $62 as a result of this.

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Company Profile

Business Description

Thomson Reuters is the result of the $17.6 billion megamerger of Canada's Thomson and the United Kingdom's Reuters Group in 2008 and the 2018 carve-out of its finance and risk business, Refinitiv, in which it holds a 45% stake. In 2019, the company agreed to exchange its 45% stake in Refinitiv for a 15% stake in LSE. Since the divestiture, the company is more concentrated on selling its flagship legal data and software, WestLaw, and its tax accounting software, OneSource. In addition, the company does hold a significant investment in the publicly traded Tradeweb, which operates a fixed income exchange.

333 Bay Street, Suite 400
Toronto, ON, M5H 2R2, Canada
T +1 416 687-7500
Sector Industrials
Industry Consulting Services
Most Recent Earnings Mar 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 24,400