Thomson Reuters Remains Resilient With Revenue Growth Despite Economic Challenges

A dominant market position, consistent revenue growth, and strategic investments in AI and acquisitions position Thomson Reuters for continued success. While the stock trades at a premium valuation of 43.9 times forward earnings, this reflects the company’s quality and growth potential.

A potent combination of steady revenue growth, expanding profit margins, and shareholder-friendly capital allocation policies make the firm an attractive long-term investment opportunity. As the company continues to integrate AI capabilities and expand its product offerings, it is well-positioned to maintain its leadership in the legal and tax information markets.

THOMSON REUTERS CORP. (Toronto symbol TRI; www.thomsonreuters.com) sells specialized information and software to the legal, tax and accounting fields. It also owns the Reuters news service.

On October 2018, in a major transaction, the company sold 55% of its Refinitiv business to a consortium led by Blackstone Group LP (New York symbol BX). That business sold specialized financial information products to clients such as banks and brokerages. In exchange, Thomson received $17 billion—$3 billion in cash and $14 billion in notes and preferred shares (all amounts except share price and market cap in U.S. dollars).

In January 2021, Thomson and Blackstone sold the rest of Refinitiv to the London Stock Exchange Group plc in an all-stock transaction. Since then, Thomson has steadily sold its LSE shares, and disposed of its final stake in May 2024. It used most of the cash from those sales to buy back its stock.

From 2019 to 2023, Thomson’s revenue rose 15.0%, from $5.91 billion to $6.79 billion. Earnings before unusual items also soared 152.2%, from $646 million to $1.63 billion, while per-share earnings shot up 172.1%, from $1.29 to $3.51.

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Thanks to improving demand for its legal and tax information products, revenue in the quarter ended December 31, 2024, rose 5.2%, to $1.91 billion from $1.82 billion a year earlier. That topped the consensus forecast of $1.88 billion.

The company is also doing a good job signing up more subscribers. In the quarter, recurring revenue rose 7%, and it now accounts for 83% of total revenue.

Overall earnings before unusual items rose 1.8%, to $454 million from $446 million. Thomson spent $639 million on share buybacks in 2024, which is why per-share earnings improved 3.1%, to $1.01 from $0.98. That also beat the $0.96 consensus estimate.

Thomson Reuters: Strategic acquisition boosts tax software capabilities

Thomson recently acquired cPaperless, LLC, which operates as SafeSend. Based in Michigan, this business makes cloud-based software that helps tax and accounting firms speed up and improve the accuracy of the tax returns they prepare for their clients. The company paid $600 million for this purchase.

The new operations should also add $60 million to Thomson’s annual revenue of $7.2 billion. Moreover, the company expects SafeSend’s revenue will rise 25% annually over the next few years.

Thomson is now incorporating artificial intelligence (AI) tools into its products—it spent more than $200 million on AI investments in 2024. These upgrades will make it easier and faster for clients to search its databases and analyze documents.

The company expects its revenue (excluding acquisitions and currency rates) to rise between 7.0% and 7.5% in 2025. It also sees 2026 revenue rising between 7.5% and 8.0%.

For 2025, Thomson’s earnings will probably rise about 8% to $4.01 U.S. a share. The stock, which is up 22% in the past year, trades at 43.9 times that forecast. While that’s a high multiple, it’s still reasonable in light of the company’s high market share and improving growth prospects. As a largely U.S.-based provider of electronic data, it has also little exposure to potential tariffs on imports from Canada, Mexico and China.

Moreover, the company is now raising your quarterly dividend by 10.2%. Starting with the March 2025 payment, investors will receive $0.595 a share instead of $0.54. The new annual rate of $2.38 yields 1.2%. Thomson has now increased the annual dividend rate each year for the past 32 years.

Thomson’s earnings will probably rise 6% to $3.71 a share in 2024, and the stock trades at a high 41.0 times that forecast. That’s still an acceptable multiple in light of the company’s high share in its niche markets.

Recommendation in The Successful Investor: Thomson Reuters Corp. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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