Company Reports

Thomson Reuters reported a very good start to 2024. First-quarter organic revenue growth accelerated to 9% from 7% in the fourth quarter with organic growth particularly strong in corporate and tax and accounting professionals segments. While there were some one-time and seasonal items impacting growth that likely won’t occur in the rest of 2024, underlying trends were still strong, in our view. As we take up our revenue estimates, we are increasing our fair value estimate to $137 from $128 but still regard shares as pricey.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its businesses should lead to meaningful margin expansion and higher retention in the years ahead.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its businesses should lead to meaningful margin expansion and higher retention in the years ahead.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its businesses should lead to meaningful margin expansion and higher retention in the years ahead.

Thomson Reuters finished 2023 with a decent quarter. Revenue of $1.82 billion was virtually in line with the FactSet consensus estimate of $1.83 billion while adjusted EBITDA and adjusted EPS edged out the consensus estimate by 1% and 8%, respectively. The firm’s 2024 revenue outlook aligned with consensus expectations but adjusted EBITDA was about 3% lighter. We will maintain our narrow moat rating but are tweaking our fair value estimate to $120 from $112 as higher revenue, particularly in 2025 and 2026, is partially offset by investment spending. While we see many positive aspects to Thomson Reuters’ business model, we view shares as pricey.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its businesses should lead to meaningful margin expansion and higher retention in the years ahead.

Narrow moat-rated Thomson Reuters reported a slight revenue miss but strong profits partly due to expense timing. Revenues missed the FactSet consensus estimate by 1% but adjusted EBITDA of $632 million beat the consensus estimate of $585 million. Management maintained its 2023 margin outlook of 39% and attributed the expense beat to timing, but we believe this may prove conservative for the full year. As we tweak our model, we are modestly increasing our fair value estimate on Thomson Reuters' shares to $112 from $109 primarily due to time value of money. While Thomson Reuters' businesses have many positive attributes, we regard shares as a touch pricey at current levels.

Thomson Reuters was mostly steady in the second quarter, as the firm’s recurring revenue model is holding up well. Organic revenue grew 5% with the firm’s three largest segments growing 7%. Overall, there was little in the firm's earnings release that would alter our long-term view of the firm, and we will maintain our narrow moat rating and fair value estimate of $109 per share. While we acknowledge Thomson Reuters' business has many positives, we view shares as pricey at current levels.

On June 27, narrow-moat-rated Thomson Reuters held a conference call to discuss its agreement to acquire Casetext, a provider of legal artificial intelligence tools, for $650 million in cash. The deal was not entirely surprising given that Insider reported that Casetext was in talks to be acquired last month. According to PitchBook data, Casetext previously raised $25 million in January 2022, giving the firm a post-money valuation of $125 million. The deal is expected to close in the second half of 2023.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its businesses should lead to meaningful margin expansion and higher retention in the years ahead.

Thomson Reuters was mostly steady in the first quarter. Revenue grew 5% organically to $1.74 billion, in line with the FactSet consensus estimate. Expenses were slightly better than expected and as a result adjusted EBITDA of $677 million and adjusted EPS of 0.80 came in a bit ahead of the consensus estimates of $663 million and $0.80, respectively. Excluding the impact of selling a majority stake in its Elite product within its legal professionals segment, the firm held its guidance. In early April, Thomson Reuters announced that it would sell approximately 80% of its Elite business within its legal segment for approximately $400 million. We believe the deal makes sense as we view Elite as not core to the firm’s strategy and as a laggard. Overall, there was little that would alter our long-term view of the firm, and we will maintain our narrow moat rating and fair value estimate of $109 per share. We regard shares as modestly overvalued.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its businesses should lead to meaningful margin expansion and higher retention in the years ahead.

Thomson Reuters was mostly steady in the fourth quarter. Revenue grew 6% organically to $1.77 billion, a tad bit below the FactSet estimate of $1.78 billion. Better-than-expected margins resulted in adjusted EPS of $0.73 topping the consensus estimate of $0.66. In 2023, Thomson Reuters still expects organic revenue growth of 5.5%-6.0% and adjusted EBITDA margins are expected to be 39%, which is essentially in line with the previous outlook of being on the low end of its 39%-40% range. Overall, there was little in the firm’s earnings release that would alter our long-term view of the firm and we will maintain our narrow moat rating and $109 fair value estimate.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its businesses should lead to meaningful margin expansion and higher retention in the years ahead.

Narrow-moat-rated Thomson Reuters continues to hold up well. Organic revenue grew 6% in the third quarter of 2022, a similar pace to the 7% seen last quarter, and the firm maintained its full-year 2022 and 2023 organic revenue outlook. We believe the steadiness of the firm’s financial results support our Uncertainty Rating of Low. Overall, there was little in the earnings release that would alter our long-term view, and we will maintain our fair value estimate of CAD 140 on the firm’s shares, which we regard as fairly valued.

Narrow-moat-rated Thomson Reuters is holding steady amid an uncertain macroeconomic environment. Organic revenue grew 7% in the second quarter, consistent with the pace seen in the prior quarter. Thomson Reuters kept its 2022 outlook mostly unchanged except for nudging its organic revenue growth outlook upward 50 basis points to 6.0% from 5.5%, which includes an organic revenue growth outlook in its three large segments of 7.0% versus a previous expectation of 6.5%. As we update our model, we are raising our fair value estimate modestly to $109 from $107 due to slightly increasing our revenue forecasts and time value of money. We are also adjusting our Morningstar Uncertainty Rating to Low from Medium to reflect the firm’s resilience in the current environment.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its businesses should lead to meaningful margin expansion and higher retention in the years ahead.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its business should lead to meaningful margin expansion and higher retention in the years ahead.

Narrow-moat-rated Thomson Reuters started 2022 with robust results. Revenue in the first quarter was $1.67 billion, up 7% organically and 1% above the FactSet consensus. Adjusted EBTIDA of $600 million and adjusted EPS of $0.66 topped the consensus estimates of $573 million and $0.61, respectively. Thomson Reuters nudged its revenue outlook for 2022 slightly higher. Overall, there was little in its press release that would alter our long-term thinking on the firm, and we will maintain our fair value estimate of $107 on the firm’s shares.

For most of the 2010s, Thomson Reuters was a laggard relative to its information services peers, in our view. Since deciding to spin off its Refinitiv financial and risk operations to London-based LSE Group, we believe the firm has gained more focus. Some of its past offerings have been clunky, and we believe efforts to streamline its business should lead to meaningful margin expansion and higher retention in the years ahead.