Near retirement? TRI may not be for you, says the Fool

In an assessment of ten measures it uses to rate stocks as the right ones for investors approaching retirement, the Fool scrutinised TRI and found it wanting. It published this chart:

NM = not meaningful due to negative GAAP earnings. Total score = number of passes.

“Since we looked at Thomson Reuters last year, the company has dropped a point, due to its earnings having gone negative after a big goodwill impairment charge,” the website said. “The stock has largely treaded water over the past year, with flat performance for its stock.”

Thomson Reuters’ breadth – news, premium information on specialised topics including tax and compliance, market information on everything from stocks and bonds to commodities and foreign exchange – helped put the company in a somewhat awkward position over the summer, when news hit that Barclays Bank had participated in a scheme to fix LIBOR benchmark interest rates, the Fool said. Thomson Reuters was the agent responsible for compiling information from member banks, and then calculating appropriate LIBOR rates from the submissions. “For its part, Thomson has insisted that its LIBOR team informed the British Bankers' Association of implausible submissions, although the BBA questioned whether Thomson’s efforts rose to the level of explicit warnings.”

In its most recent quarter, Thomson Reuters posted mixed performance, the Fool said. Revenue fell seven per cent, but the company managed a slight improvement of two per cent on the bottom line. “Thomson’s CEO [James Smith] chose not to comment on rumors that the company might try to buy the Financial Times from Pearson. But many believe such a combination would be beneficial to both companies as Pearson moves toward the educational side of its business.

“For retirees and other conservative investors, Thomson’s steady payout growth and healthy dividend yield are attractive reasons to own the stock. At current valuations, though, retirement investors may prefer to wait for a price decline before diving in and adding Thomson to their portfolios.” ■