Thomson Reuters Corp /Can/ (NASDAQ: TRI)

Sector: Industrials Industry: Specialty Business Services CIK: 0001075124
Market Cap 37.42 Bn
P/B 3.14
P/E 24.91
P/S 5.00
ROIC (Qtr) 9.99
Div Yield % 2.86
Rev 1y % (Qtr) 5.24
Total Debt (Qtr) 2.44 Bn
Debt/Equity (Qtr) 0.20
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About

Investment thesis

Bull case

  • Strong operating cash flow of 2.65B provides robust 1.09x coverage of total debt 2.44B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 2.65B provides exceptional 18.54x coverage of interest expenses 143M, showing strong debt service capability.
  • Robust free cash flow of 2.02B exceeds capital expenditure of 634M by 3.18x, indicating strong organic growth funding capability.
  • Retained earnings of 9.22B provide full 5.99x coverage of long-term debt 1.54B, indicating strong internal capital position.
  • Free cash flow of 2.02B provides exceptional 14.10x coverage of interest expense 143M, showing strong debt service ability.

Bear case

  • Operating cash flow of 2.65B barely covers its investment activities of (1.28B), with a coverage ratio of -2.06, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 2.65B provides thin coverage of dividend payments of (1.03B) with a -2.56 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 511M provide limited coverage of acquisition spending of (651M), which is -0.78x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 2.07B show weak coverage of depreciation charges of 832M, with a 2.49 ratio indicating high capital intensity and potential reinvestment needs.
  • High financing cash flow of (2.83B) relative to working capital of (1.24B), which is 2.28x suggests concerning dependence on external funding for operational needs.

Products and services [axis] Breakdown of Revenue (2024)

Segment consolidation items [axis] Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Business Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CTAS Cintas Corp 120.08 Bn 556.91 33.85 3.24 Bn
2 RELX Relx Plc 56.19 Bn 20.01 4.34 9.82 Bn
3 TRI Thomson Reuters Corp /Can/ 37.42 Bn 24.91 5.00 2.44 Bn
4 CPRT Copart Inc 36.25 Bn 22.74 7.79 0.10 Bn
5 RBA Rb Global Inc. 19.20 Bn 49.09 4.24 4.21 Bn
6 ULS UL Solutions Inc. 14.12 Bn 43.32 4.92 0.74 Bn
7 GPN Global Payments Inc 11.52 Bn 284.78 8.66 16.20 Bn
8 ARMK Aramark 10.37 Bn 32.72 0.55 6.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.21 2.48
EV to Cash from Ops. EV/CFO 14.94 30.22
EV to Debt EV to Debt 16.23 31.08
EV to EBIT EV/EBIT 19.15 94.66
EV to EBITDA EV/EBITDA 13.36 18.37
EV to Free Cash Flow [EV/FCF] EV/FCF 19.64 -20.73
EV to Market Cap EV to Market Cap 1.06 178.66
EV to Revenue EV/Rev 5.30 8.12
Price to Book Value [P/B] P/B 3.14 5.37
Price to Earnings [P/E] P/E 24.91 65.19
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.45 -15,800.59
Dividend Payout Ratio % Div Payout % (Qtr) 71.30 10.14
Dividend per Basic Share Div per Share (Qtr) 2.38 0.35
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 52.98 7.65
Interest Coverage Int. cover (Qtr) 14.46 30.46
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -4.45 -178.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -74.03 155.14
Dividend Growth (1y) % Div 1y % (Qtr) 10.19 5.38
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -30.94 -34.92
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 4.37 -86.28
EBIT Growth (1y) % EBIT 1y % (Qtr) -6.26 -22.62
EBT Growth (1y) % EBT 1y % (Qtr) -7.50 -287.35
EPS Growth (1y) % EPS 1y % (Qtr) -31.70 -118.47
FCF Growth (1y) % FCF 1y % (Qtr) 9.03 -146.43
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.00 2.63
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.42 0.84
Cash Payout Ratio Cash Payout (Qtr) 0.32 -0.03
Cash Ratio Cash Ratio (Qtr) 0.15 1.15
Current Ratio Curr Ratio (Qtr) 0.64 4.12
Debt to Equity Ratio Debt/Equity (Qtr) 0.20 0.92
Interest Cover Ratio Int Coverage (Qtr) 14.46 30.46
Times Interest Earned Times Interest Earned (Qtr) 14.46 30.46
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 38.80 -33.89
EBIT Margin % EBIT Margin % (Qtr) 27.66 -43.32
EBT Margin % EBT Margin % (Qtr) 25.75 -44.88
Gross Margin % Gross Margin % (Qtr) 100.00 39.81
Net Profit Margin % Net Margin % (Qtr) 20.10 -41.60