Thomson Reuters (TRI) versus Morningstar (MORN) Critical Review
Thomson Reuters (NYSE: TRI) and Morningstar (NASDAQ:MORN) are both mid-cap business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, valuation, risk, dividends and analyst recommendations.
This is a breakdown of recent ratings and recommmendations for Thomson Reuters and Morningstar, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Thomson Reuters presently has a consensus target price of $51.08, indicating a potential upside of 15.42%. Given Thomson Reuters’ higher possible upside, equities analysts plainly believe Thomson Reuters is more favorable than Morningstar.
Thomson Reuters pays an annual dividend of $1.38 per share and has a dividend yield of 3.1%. Morningstar pays an annual dividend of $0.92 per share and has a dividend yield of 1.0%. Thomson Reuters pays out 33.1% of its earnings in the form of a dividend. Morningstar pays out 23.6% 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. Morningstar has raised its dividend for 9 consecutive years.
Earnings and Valuation
This table compares Thomson Reuters and Morningstar’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Thomson Reuters||$11.17 billion||2.82||$3.10 billion||$4.17||10.61|
|Morningstar||$798.60 million||4.93||$161.00 million||$3.90||23.73|
Thomson Reuters has higher revenue and earnings than Morningstar. Thomson Reuters is trading at a lower price-to-earnings ratio than Morningstar, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Thomson Reuters has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Morningstar has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500.
Institutional & Insider Ownership
24.6% of Thomson Reuters shares are owned by institutional investors. Comparatively, 38.7% of Morningstar shares are owned by institutional investors. 57.4% of Morningstar shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This table compares Thomson Reuters and Morningstar’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Morningstar beats Thomson Reuters on 9 of the 16 factors compared between the two stocks.
About Thomson Reuters
Thomson Reuters Corp (Thomson Reuters) is a Canada-based 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 unit is a provider of critical news, information and analytics, enabling transactions and connecting communities of trading, investment, financial and corporate professionals. The Legal unit 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 unit 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.
Morningstar, Inc. is a provider of independent investment research in North America, Europe, Australia, and Asia. The Company focuses to create products that help investors reach their financial goals. It offers a range of data, software, research, and investment management offerings for financial advisors, asset managers, sponsors, and individual investors. It provides data and research insights on a range of investment offerings, including managed investment products, listed companies, capital markets, and real-time global market data. It conducts its business operations outside of the United States through subsidiaries in countries, including Australia, Brazil, Canada, Chile, Denmark, France, Germany, India, Italy, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, People’s Republic of China (both Hong Kong and the mainland), Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, the United Arab Emirates, and the United Kingdom.
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