THOMSON REUTERS CORP. $45 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 799.7 million; Market cap: $36.0 billion; Price-to-sales ratio: 2.8; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.thomsonreuters.com) is seeing higher demand for its financial information products for the first time since the 2008 economic crisis. Sales at its legal and tax and accounting businesses are also improving.
In the three months ended September 30, 2014, Thomson’s overall revenue rose 1.1%, to $3.11 billion from $3.07 billion a year earlier (all amounts except share price and market cap in U.S. dollars).
The financial division’s revenue (54% of the total) fell 0.7%. But banks and other clients are buying more products than they’re cancelling, which should raise this division’s future revenue.
Revenue rose 1.3% at the legal-products division (28%), 11.5% at tax and accounting (10%) and 3.3% at intellectual property and science (8%).
Earnings fell 9.1%, to $361 million from $397 million. Per-share earnings declined 6.3%, to $0.45 from $0.48, on fewer shares outstanding. That’s mainly due to unfavourable currency exchange rates and higher income taxes.
Thomson continues to phase out unprofitable products and cut costs; its yearly expenses should fall by $300 million by the end of 2015.
As a result, its projected earnings should rise from $1.88 a share in 2014 to $2.21 in 2015. The stock trades at a reasonable 17.7 times the 2015 estimate. The $1.32 dividend yields 3.4%.
Thomson Reuters is a buy.
