Results: Thomson Reuters Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates
Investors in Thomson Reuters Corporation (TSE:TRI) had a good week, as its shares rose 5.0% to close at CA$213 following the release of its full-year results. It looks like a credible result overall - although revenues of US$6.8b were in line with what the analysts predicted, Thomson Reuters surprised by delivering a statutory profit of US$5.80 per share, a notable 19% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Thomson Reuters
After the latest results, the 16 analysts covering Thomson Reuters are now predicting revenues of US$7.25b in 2024. If met, this would reflect an okay 6.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to plummet 43% to US$3.35 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$7.19b and earnings per share (EPS) of US$3.50 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 7.7% to CA$203, suggesting the revised estimates are not indicative of a weaker long-term future for the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Thomson Reuters analyst has a price target of CA$243 per share, while the most pessimistic values it at CA$162. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Thomson Reuters' growth to accelerate, with the forecast 6.7% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.1% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 6.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Thomson Reuters is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Thomson Reuters going out to 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Thomson Reuters (1 shouldn't be ignored!) that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
