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What to Expect From Thomson Reuters (TRI) in Q4 Earnings?

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Thomson Reuters Corporation (TRI - Free Report) is slated to report fourth-quarter 2017 results before the market opens on Feb 8. In the previous quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 10 cents.

Notably, the company topped the Zacks Consensus Estimate in each of the trailing four quarters with a positive earnings surprise of 14.3%. However, it remains to be seen if Thomson Reuters will be able to keep its earnings surprise streak alive this time.

Let’s see how things are shaping up for this announcement.

Factors Influencing Q4

Thomson Reuters continues to benefit from greater operating leverage and is likely to record higher revenues and margins in the quarter on the back of its simplification initiatives. Management remains optimistic about the company’s future performance, given its constant endeavors to implement core strategies and achieve financial goals. We believe that its cost-containment efforts, share buyback plan and impressive performance of the underlying subscription revenues bode well.

The company’s core subscription businesses continue to perform well and it is encouraging to see its Financial & Risk business — the largest revenue generating segment — reporting strong revenue growth. The company has been working to achieve its earnings target for 2017. It also intends to keep improving its free cash flow per share.

Thomson Reuters expects its underlying fundamentals to improve in the last quarter of 2017. The company also expects to benefit from its integrated technology system that takes structured and unstructured information and turns it into a structured taxonomy with a focus on the financial services industry. However, adverse currency fluctuations may play a spoilsport in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Thomson Reuters is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Thomson Reuters Corp Price and EPS Surprise
 

Zacks Rank: Thomson Reuters has a Zacks Rank #5 (Strong Sell).

As it is we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Zendesk, Inc. (ZEN - Free Report) has an Earnings ESP of +66.67% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AmerisourceBergen Corporation (ABC - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank #3.

The Home Depot, Inc. (HD - Free Report) has an Earnings ESP of +1.66% and a Zacks Rank #2.

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