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Thomson Reuters Stock (TSE:TRI) Falls Despite Q3-2022 Earnings Beat; Cash Flow a Concern

Story Highlights

Thomson Reuters reported its Q3-2022 results, and while the results weren’t bad, investors sold off the stock. Still, it’s a solid, profitable company that analysts are bullish on.

Thomson Reuters (TSE: TRI) (NYSE: TRI), a media company that provides news and business information services to professionals, recently reported its Q3-2022 financial results, which missed revenue expectations but beat earnings-per-share (EPS) expectations. Please note that the following figures are in U.S. dollars. TRI’s revenue reached $1.574 billion, which slightly missed expectations by $20 million but represented a 3% growth rate. 

Meanwhile, adjusted earnings per share were $0.57, up 24% year-over-year, beating estimates calling for $0.49 per share. Additionally, the company’s adjusted EBITDA margin was 34% compared to 30% last year, and its operating profit grew 41%, reaching $398 million.

However, Thomson Reuters’ free cash flow came in at $386 million for the quarter, only growing by 2%. The company bought back $855 million worth of shares from June 8, 2022, to October 28.

Thomson Reuters kept its guidance steady for 2022 and 2023. For 2022, it expects revenue growth of 6%, an adjusted EBITDA margin of 35%, and free cash flow of about $1.3 billion. For the full-year 2023, TRI anticipates revenue growth of 5.5% – 6.0% and an adjusted EBITDA margin between the 39% – 40% range. Free cash flow is forecast to be between $1.9 billion – $2.0 billion, partially due to lower capital expenditures as a percentage of revenue.

Is Thomson Reuters Stock a Good Buy, According to Analysts?

According to analysts, TRI stock comes in as a Moderate Buy based on three Buys and two Holds assigned in the past three months. The average TRI stock price target of $116.48 implies 13.26% upside potential.

Conclusion: TRI’s Results Were Good, but Investors Expected More

While TRI’s results were not bad at all — revenue and earnings grew, and the company maintained its guidance — investors were expecting more, as the stock finished the day 3.24% lower. Nonetheless, analysts are cautiously optimistic, giving the stock a decent amount of upside potential.


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