Intrinsic value of Thomson Reuters - TRI

Previous Close

$47.28

  Intrinsic Value

$40.58

stock screener

  Rating & Target

hold

-14%

  Value-price divergence*

-19%

Previous close

$47.28

 
Intrinsic value

$40.58

 
Up/down potential

-14%

 
Rating

hold

 
Value-price divergence*

-19%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TRI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 33.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -0.81
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  11,166
  11,389
  11,651
  11,951
  12,287
  12,659
  13,068
  13,513
  13,995
  14,514
  15,071
  15,667
  16,303
  16,980
  17,699
  18,463
  19,272
  20,128
  21,034
  21,991
  23,001
  24,068
  25,192
  26,377
  27,626
  28,941
  30,326
  31,783
  33,317
  34,930
  36,628
Variable operating expenses, $m
 
  9,811
  10,004
  10,224
  10,470
  10,744
  11,044
  11,371
  11,725
  12,106
  12,515
  11,504
  11,971
  12,468
  12,996
  13,557
  14,151
  14,780
  15,445
  16,147
  16,889
  17,672
  18,498
  19,368
  20,285
  21,251
  22,267
  23,338
  24,464
  25,649
  26,895
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  9,776
  9,811
  10,004
  10,224
  10,470
  10,744
  11,044
  11,371
  11,725
  12,106
  12,515
  11,504
  11,971
  12,468
  12,996
  13,557
  14,151
  14,780
  15,445
  16,147
  16,889
  17,672
  18,498
  19,368
  20,285
  21,251
  22,267
  23,338
  24,464
  25,649
  26,895
Operating income, $m
  1,390
  1,578
  1,648
  1,727
  1,816
  1,915
  2,024
  2,142
  2,270
  2,408
  2,556
  4,163
  4,332
  4,512
  4,703
  4,906
  5,121
  5,349
  5,589
  5,844
  6,112
  6,395
  6,694
  7,009
  7,341
  7,690
  8,058
  8,446
  8,853
  9,282
  9,733
EBITDA, $m
  2,942
  3,592
  3,675
  3,769
  3,875
  3,993
  4,122
  4,262
  4,414
  4,578
  4,753
  4,941
  5,142
  5,355
  5,582
  5,823
  6,078
  6,348
  6,634
  6,936
  7,255
  7,591
  7,945
  8,319
  8,713
  9,128
  9,565
  10,024
  10,508
  11,017
  11,552
Interest expense (income), $m
  347
  270
  283
  297
  313
  331
  351
  372
  396
  422
  450
  480
  512
  546
  582
  621
  662
  705
  751
  799
  851
  905
  962
  1,022
  1,086
  1,152
  1,223
  1,297
  1,375
  1,457
  1,544
Earnings before tax, $m
  1,037
  1,308
  1,365
  1,431
  1,504
  1,585
  1,673
  1,770
  1,874
  1,986
  2,106
  3,683
  3,820
  3,966
  4,121
  4,285
  4,459
  4,644
  4,838
  5,044
  5,261
  5,491
  5,732
  5,987
  6,255
  6,538
  6,835
  7,148
  7,478
  7,824
  8,189
Tax expense, $m
  -15
  353
  369
  386
  406
  428
  452
  478
  506
  536
  569
  994
  1,031
  1,071
  1,113
  1,157
  1,204
  1,254
  1,306
  1,362
  1,421
  1,482
  1,548
  1,616
  1,689
  1,765
  1,846
  1,930
  2,019
  2,113
  2,211
Net income, $m
  3,098
  955
  996
  1,044
  1,098
  1,157
  1,222
  1,292
  1,368
  1,450
  1,538
  2,689
  2,789
  2,895
  3,008
  3,128
  3,255
  3,390
  3,532
  3,682
  3,841
  4,008
  4,185
  4,370
  4,566
  4,773
  4,990
  5,218
  5,459
  5,712
  5,978

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,435
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  27,852
  25,944
  26,540
  27,223
  27,988
  28,837
  29,768
  30,782
  31,879
  33,061
  34,330
  35,688
  37,136
  38,678
  40,317
  42,056
  43,899
  45,850
  47,913
  50,093
  52,395
  54,824
  57,385
  60,084
  62,929
  65,925
  69,079
  72,399
  75,893
  79,568
  83,434
Adjusted assets (=assets-cash), $m
  25,417
  25,944
  26,540
  27,223
  27,988
  28,837
  29,768
  30,782
  31,879
  33,061
  34,330
  35,688
  37,136
  38,678
  40,317
  42,056
  43,899
  45,850
  47,913
  50,093
  52,395
  54,824
  57,385
  60,084
  62,929
  65,925
  69,079
  72,399
  75,893
  79,568
  83,434
Revenue / Adjusted assets
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
  0.439
Average production assets, $m
  8,490
  8,656
  8,855
  9,083
  9,338
  9,621
  9,932
  10,270
  10,636
  11,031
  11,454
  11,907
  12,390
  12,905
  13,451
  14,032
  14,647
  15,297
  15,986
  16,713
  17,481
  18,291
  19,146
  20,047
  20,996
  21,995
  23,048
  24,155
  25,321
  26,547
  27,837
Working capital, $m
  72
  -1,207
  -1,235
  -1,267
  -1,302
  -1,342
  -1,385
  -1,432
  -1,483
  -1,538
  -1,598
  -1,661
  -1,728
  -1,800
  -1,876
  -1,957
  -2,043
  -2,134
  -2,230
  -2,331
  -2,438
  -2,551
  -2,670
  -2,796
  -2,928
  -3,068
  -3,215
  -3,369
  -3,532
  -3,703
  -3,883
Total debt, $m
  7,458
  6,570
  6,897
  7,270
  7,689
  8,153
  8,662
  9,217
  9,817
  10,464
  11,158
  11,900
  12,692
  13,536
  14,432
  15,384
  16,392
  17,459
  18,588
  19,780
  21,039
  22,367
  23,768
  25,245
  26,801
  28,440
  30,165
  31,981
  33,892
  35,903
  38,018
Total liabilities, $m
  15,079
  14,191
  14,518
  14,891
  15,310
  15,774
  16,283
  16,838
  17,438
  18,085
  18,779
  19,521
  20,313
  21,157
  22,053
  23,005
  24,013
  25,080
  26,209
  27,401
  28,660
  29,988
  31,389
  32,866
  34,422
  36,061
  37,786
  39,602
  41,513
  43,524
  45,639
Total equity, $m
  12,773
  11,753
  12,023
  12,332
  12,679
  13,063
  13,485
  13,944
  14,441
  14,977
  15,552
  16,166
  16,823
  17,521
  18,264
  19,051
  19,886
  20,770
  21,705
  22,692
  23,735
  24,835
  25,995
  27,218
  28,507
  29,864
  31,293
  32,797
  34,379
  36,044
  37,796
Total liabilities and equity, $m
  27,852
  25,944
  26,541
  27,223
  27,989
  28,837
  29,768
  30,782
  31,879
  33,062
  34,331
  35,687
  37,136
  38,678
  40,317
  42,056
  43,899
  45,850
  47,914
  50,093
  52,395
  54,823
  57,384
  60,084
  62,929
  65,925
  69,079
  72,399
  75,892
  79,568
  83,435
Debt-to-equity ratio
  0.584
  0.560
  0.570
  0.590
  0.610
  0.620
  0.640
  0.660
  0.680
  0.700
  0.720
  0.740
  0.750
  0.770
  0.790
  0.810
  0.820
  0.840
  0.860
  0.870
  0.890
  0.900
  0.910
  0.930
  0.940
  0.950
  0.960
  0.980
  0.990
  1.000
  1.010
Adjusted equity ratio
  0.407
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453
  0.453

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,098
  955
  996
  1,044
  1,098
  1,157
  1,222
  1,292
  1,368
  1,450
  1,538
  2,689
  2,789
  2,895
  3,008
  3,128
  3,255
  3,390
  3,532
  3,682
  3,841
  4,008
  4,185
  4,370
  4,566
  4,773
  4,990
  5,218
  5,459
  5,712
  5,978
Depreciation, amort., depletion, $m
  1,552
  2,014
  2,027
  2,042
  2,059
  2,077
  2,098
  2,120
  2,144
  2,169
  2,197
  778
  810
  843
  879
  917
  957
  1,000
  1,045
  1,092
  1,143
  1,196
  1,251
  1,310
  1,372
  1,438
  1,506
  1,579
  1,655
  1,735
  1,819
Funds from operations, $m
  3,002
  2,969
  3,024
  3,086
  3,157
  3,234
  3,319
  3,412
  3,512
  3,619
  3,735
  3,467
  3,599
  3,739
  3,888
  4,045
  4,213
  4,390
  4,577
  4,775
  4,983
  5,204
  5,436
  5,681
  5,939
  6,210
  6,496
  6,797
  7,114
  7,447
  7,797
Change in working capital, $m
  18
  -24
  -28
  -32
  -36
  -39
  -43
  -47
  -51
  -55
  -59
  -63
  -67
  -72
  -76
  -81
  -86
  -91
  -96
  -101
  -107
  -113
  -119
  -126
  -132
  -139
  -147
  -154
  -163
  -171
  -180
Cash from operations, $m
  2,984
  2,993
  3,051
  3,118
  3,192
  3,274
  3,363
  3,459
  3,563
  3,674
  3,794
  3,530
  3,666
  3,810
  3,964
  4,126
  4,298
  4,481
  4,673
  4,876
  5,091
  5,317
  5,555
  5,806
  6,071
  6,350
  6,643
  6,952
  7,276
  7,618
  7,977
Maintenance CAPEX, $m
  0
  -555
  -566
  -579
  -594
  -610
  -629
  -649
  -671
  -695
  -721
  -749
  -778
  -810
  -843
  -879
  -917
  -957
  -1,000
  -1,045
  -1,092
  -1,143
  -1,196
  -1,251
  -1,310
  -1,372
  -1,438
  -1,506
  -1,579
  -1,655
  -1,735
New CAPEX, $m
  -905
  -166
  -199
  -228
  -255
  -283
  -311
  -338
  -366
  -394
  -423
  -453
  -483
  -515
  -547
  -580
  -615
  -651
  -688
  -727
  -768
  -810
  -855
  -901
  -949
  -1,000
  -1,052
  -1,108
  -1,166
  -1,226
  -1,290
Cash from investing activities, $m
  2,186
  -721
  -765
  -807
  -849
  -893
  -940
  -987
  -1,037
  -1,089
  -1,144
  -1,202
  -1,261
  -1,325
  -1,390
  -1,459
  -1,532
  -1,608
  -1,688
  -1,772
  -1,860
  -1,953
  -2,051
  -2,152
  -2,259
  -2,372
  -2,490
  -2,614
  -2,745
  -2,881
  -3,025
Free cash flow, $m
  5,170
  2,272
  2,287
  2,312
  2,343
  2,380
  2,423
  2,471
  2,525
  2,585
  2,649
  2,329
  2,405
  2,486
  2,574
  2,667
  2,766
  2,872
  2,985
  3,104
  3,230
  3,364
  3,505
  3,654
  3,812
  3,978
  4,153
  4,338
  4,532
  4,737
  4,952
Issuance/(repayment) of debt, $m
  -1,043
  291
  326
  373
  419
  464
  509
  555
  600
  647
  694
  742
  792
  844
  897
  951
  1,008
  1,067
  1,129
  1,192
  1,259
  1,328
  1,401
  1,477
  1,556
  1,639
  1,725
  1,816
  1,911
  2,010
  2,115
Issuance/(repurchase) of shares, $m
  -1,673
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2,730
  291
  326
  373
  419
  464
  509
  555
  600
  647
  694
  742
  792
  844
  897
  951
  1,008
  1,067
  1,129
  1,192
  1,259
  1,328
  1,401
  1,477
  1,556
  1,639
  1,725
  1,816
  1,911
  2,010
  2,115
Total cash flow (excl. dividends), $m
  2,427
  2,563
  2,613
  2,685
  2,762
  2,844
  2,932
  3,026
  3,126
  3,231
  3,344
  3,071
  3,197
  3,330
  3,470
  3,618
  3,775
  3,939
  4,113
  4,296
  4,489
  4,692
  4,906
  5,131
  5,368
  5,617
  5,878
  6,154
  6,443
  6,747
  7,067
Retained Cash Flow (-), $m
  -160
  -236
  -270
  -309
  -347
  -384
  -422
  -459
  -497
  -536
  -575
  -615
  -656
  -699
  -742
  -788
  -835
  -884
  -935
  -988
  -1,043
  -1,100
  -1,160
  -1,223
  -1,289
  -1,357
  -1,429
  -1,504
  -1,583
  -1,665
  -1,751
Prev. year cash balance distribution, $m
 
  1,256
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,584
  2,343
  2,376
  2,415
  2,460
  2,511
  2,567
  2,629
  2,696
  2,769
  2,456
  2,541
  2,631
  2,728
  2,830
  2,940
  3,056
  3,179
  3,309
  3,447
  3,592
  3,746
  3,908
  4,079
  4,259
  4,449
  4,650
  4,860
  5,082
  5,316
Discount rate, %
 
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
PV of cash for distribution, $m
 
  3,433
  2,140
  2,061
  1,980
  1,896
  1,809
  1,719
  1,626
  1,529
  1,431
  1,147
  1,064
  979
  894
  809
  725
  643
  564
  489
  418
  353
  294
  241
  195
  154
  120
  92
  69
  50
  36
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Thomson Reuters Corporation (Thomson Reuters) is a Canada-based provider of news and information for professional markets. The Company is organized in three business units: Financial & Risk, Legal, and Tax & Accounting. The Financial & Risk unit is a provider of critical news, information and analytics, enabling transactions and connecting communities of trading, investment, financial and corporate professionals. The Legal unit is a provider of critical online and print information, decision tools, software and services that support legal, investigation, business and government professionals around the world. The Tax & Accounting unit is a provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government. The Company also operates Reuters, Global Growth Organization (GGO) and Enterprise Technology & Operations (ET&O). Thomson Reuters operates in over 100 countries.

FINANCIAL RATIOS  of  Thomson Reuters (TRI)

Valuation Ratios
P/E Ratio 11.1
Price to Sales 3.1
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 11.5
Price to Free Cash Flow 16.5
Growth Rates
Sales Growth Rate -0.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.8%
Cap. Spend. - 3 Yr. Gr. Rate -2.1%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 49.2%
Total Debt to Equity 58.4%
Interest Coverage 4
Management Effectiveness
Return On Assets 12.1%
Ret/ On Assets - 3 Yr. Avg. 8.3%
Return On Total Capital 14.9%
Ret/ On T. Cap. - 3 Yr. Avg. 9.6%
Return On Equity 24.4%
Return On Equity - 3 Yr. Avg. 15.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 92.5%
Gross Margin - 3 Yr. Avg. 92.2%
EBITDA Margin 26.3%
EBITDA Margin - 3 Yr. Avg. 29.1%
Operating Margin 12.4%
Oper. Margin - 3 Yr. Avg. 15.3%
Pre-Tax Margin 9.3%
Pre-Tax Margin - 3 Yr. Avg. 11.8%
Net Profit Margin 27.7%
Net Profit Margin - 3 Yr. Avg. 18%
Effective Tax Rate -1.4%
Eff/ Tax Rate - 3 Yr. Avg. 1.5%
Payout Ratio 31.7%

TRI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TRI stock intrinsic value calculation we used $11166 million for the last fiscal year's total revenue generated by Thomson Reuters. The default revenue input number comes from 2016 income statement of Thomson Reuters. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TRI stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.4%, whose default value for TRI is calculated based on our internal credit rating of Thomson Reuters, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Thomson Reuters.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TRI stock the variable cost ratio is equal to 86.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TRI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.3% for Thomson Reuters.

Corporate tax rate of 27% is the nominal tax rate for Thomson Reuters. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TRI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TRI are equal to 76%.

Life of production assets of 15.3 years is the average useful life of capital assets used in Thomson Reuters operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TRI is equal to -10.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $12773 million for Thomson Reuters - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 715.41 million for Thomson Reuters is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Thomson Reuters at the current share price and the inputted number of shares is $33.8 billion.

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COMPANY NEWS

▶ Chart of the Day: SGD bond issuance hits $17b YTD   [Sep-19-17 08:56PM  Singapore Business Review]
▶ Thomson Reuters as a Dividend Play   [Sep-11-17 05:26PM  GuruFocus.com]
▶ Top Ranked Income Stocks to Buy for August 31st   [Aug-31-17 11:02AM  Zacks]
▶ Thomson Reuters tops 2Q profit forecasts   [Aug-01-17 09:41PM  Associated Press]
▶ ETFs with exposure to Thomson Reuters Corp. : May 8, 2017   [May-08-17 05:22PM  Capital Cube]
▶ Thomson Reuters beats Street 1Q forecasts   [06:40AM  Associated Press]
▶ Netflix adds fewer-than-expected subscribers   [Apr-17-17 06:24PM  CNBC]
▶ A Boston fintech startup is powering Thomson Reuters' new investment tool   [Apr-12-17 10:30AM  American City Business Journals]
▶ FactSet (FDS) on Growth Path: Should You Hold the Stock?   [Mar-30-17 08:52AM  Investopedia]
▶ FactSet (FDS) Tops Q2 Earnings Estimates, Misses Revenues   [Mar-29-17 08:19AM  Investopedia]
▶ Thomson Reuters Files 2016 Annual Report   [Mar-09-17 04:55PM  PR Newswire]
▶ London silver benchmark providers to step down   [Mar-06-17 02:57PM  at MarketWatch]
Financial statements of TRI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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