Thomson Reuters Corp (NYSE: TRI) and Broadridge Financial Solutions (NYSE:BR) are both mid-cap business services companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitabiliy, valuation and risk.

Analyst Ratings

This is a summary of recent recommendations and price targets for Thomson Reuters Corp and Broadridge Financial Solutions, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Thomson Reuters Corp 1 6 4 0 2.27
Broadridge Financial Solutions 0 2 1 0 2.33

Thomson Reuters Corp presently has a consensus price target of $47.75, suggesting a potential upside of 4.30%. Broadridge Financial Solutions has a consensus price target of $75.00, suggesting a potential downside of 0.48%. Given Thomson Reuters Corp’s higher possible upside, equities research analysts clearly believe Thomson Reuters Corp is more favorable than Broadridge Financial Solutions.

Institutional and Insider Ownership

27.0% of Thomson Reuters Corp shares are held by institutional investors. Comparatively, 84.9% of Broadridge Financial Solutions shares are held by institutional investors. 3.5% of Broadridge Financial Solutions shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Thomson Reuters Corp has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, Broadridge Financial Solutions has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Valuation & Earnings

This table compares Thomson Reuters Corp and Broadridge Financial Solutions’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Thomson Reuters Corp $11.19 billion 2.95 $2.50 billion $4.25 10.77
Broadridge Financial Solutions $3.77 billion 2.35 $660.00 million $2.56 29.44

Thomson Reuters Corp has higher revenue and earnings than Broadridge Financial Solutions. Thomson Reuters Corp is trading at a lower price-to-earnings ratio than Broadridge Financial Solutions, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Thomson Reuters Corp and Broadridge Financial Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Thomson Reuters Corp 28.14% 13.37% 6.07%
Broadridge Financial Solutions 8.21% 34.74% 11.62%

Dividends

Thomson Reuters Corp pays an annual dividend of $1.38 per share and has a dividend yield of 3.0%. Broadridge Financial Solutions pays an annual dividend of $1.32 per share and has a dividend yield of 1.8%. Thomson Reuters Corp pays out 32.5% of its earnings in the form of a dividend. Broadridge Financial Solutions pays out 51.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Thomson Reuters Corp has increased its dividend for 9 consecutive years and Broadridge Financial Solutions has increased its dividend for 9 consecutive years. Thomson Reuters Corp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Thomson Reuters Corp beats Broadridge Financial Solutions on 9 of the 16 factors compared between the two stocks.

Thomson Reuters Corp Company Profile

Thomson Reuters Corporation (Thomson Reuters) is a 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 segment is a provider of critical news, information and analytics, enabling transactions and connecting communities of trading, investment, financial and corporate professionals. The Legal segment 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 segment 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.

Broadridge Financial Solutions Company Profile

Broadridge Financial Solutions, Inc. (Broadridge) is a provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. The Company’s segments include Investor Communication Solutions, and Global Technology and Operations. The Company offers Bank/Broker-Dealer Investor Communication Solutions, Customer Communication Solutions, Corporate Issuer Solutions, Advisor Solutions and Mutual Fund and Retirement Solutions through Investor Communication Solutions segment. The Company offers a middle- and back-office securities processing platform for North American and global broker-dealers. Its services include investor and customer communications, securities processing, and data and analytics solutions. The Company delivers a range of solutions that helps its clients serve their retail and institutional customers across the entire investment lifecycle, including pre-trade, trade, and post-trade processing functionality.

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