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Up 30% This Year, Thomson Reuters Stock Still Has an Ace up its Sleeve

Amy Legate-Wolfe
·4 min read
calculate and analyze stock
Image source: Getty Images

Written by Amy Legate-Wolfe at The Motley Fool Canada

Shares of Thomson Reuters (TSX:TRI) may have increased 30% in the last year, but investors interested in the stock may want to hold out for more. The news and information provider recently posted strong earnings and the potential for more growth from one area of interest.

What happened?

First, let’s edge into earnings. TRI stock reported higher-than-expected results this month as the company brought in strong quarterly profit. Wall Street expected earnings per share at US$0.90; instead, Wall Street was pleasantly surprised to see US$0.98 per share. This was quite the jump from US$0.75 per share a year before.

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Revenue increased 3% to US$1.8 billion as well, which fell within estimate expectations. Shares then rose 2% after the announcement, especially after the company’s chief executive officer, Steve Hasker, announced this year that it would not be a cost-cutting year.

Instead, TRI stock is expected to end its $1 billion share buyback plan by the end of the second quarter and increase its dividend by 10%. So, all around, it was great news for investors. Yet even more is already underway.

Investing in AI

TRI stock is yet another company that not only invested in artificial intelligence (AI) but saw the benefits come to fruition during this last quarter. Demand for its AI-enhanced products increased among legal and professional clients. This all helped lower costs for everyone, including TRI stock.

TRI stock has since struck deals to license its news content, and to help train larger AI language models. And that investment should be underway this year, according to Hasker.

“We’re in growth and investment mode. 2024 is an investment year for us,” said Hasker in an interview with Reuters. “We see growth opportunities in 2025, 26 and beyond around generative AI, but not exclusively generative AI.”

While not exclusive, this generative AI should have a large part of the company’s product portfolio. It, therefore, should play a larger role this year and in the years to come.

Bottom line

After a strong year, it seems TRI stock is looking to make the company even stronger. Cutting costs through the use of AI is one thing, but expanding through AI is even better. The company now expects organic revenue to rise 6% in 2024. Furthermore, it should go on to rise between 6.5-8% in 2025 and 2026.

So, with AI already helping to increase the company’s content and bring in more readers, as well as professionals, this looks like a strong company for consideration — especially as it continues to grow both through organic and acquisition means. It spent US$2.1 billion in acquisitions last year alone and has US$8 billion set aside for the next three years.

So, is TRI stock done? Not even close. This is why now might be the time to lock up the 1.36% dividend yield and see even more growth in the future. Who knows? There could be another 30% rise in store for investors over the next year alone, never mind the next decade.

The post Up 30% This Year, Thomson Reuters Stock Still Has an Ace up its Sleeve appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2024