Thomson Reuters (TRI) Q2 Earnings: What's In The Cards?

Thomson Reuters Corporation (TO:TRI) is slated to report second-quarter 2017 results before the market opens on Aug 1. In the previous quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 10 cents.

Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a positive earnings surprise of 9.22%. 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.

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. This is because 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:

(You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.)

Zacks ESP: The Most Accurate estimate for the company and the Zacks Consensus Estimate both stand at 51 cents. So, the difference – the Earnings ESP – is 0.00%.

Zacks Rank: Thomson Reuters carries a Zacks Rank #4 (Sell)

Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors this Quarter

During the quarter, Thomson Reuters collaborated with Oracle Corporation (NYSE:ORCL) to launch ONESOURCE. This is a global tax technology solution, which is incorporated with Oracle Enterprise Resource Planning (ERP) Cloud. It will enable companies to comply with all their real-time tax calculations needs. This solution will help Thomson Reuters boost its sales.

In the previous quarter, Thomson Reuters completed its acquisitions of Clarient Global LLC and Avox Limited. This deal expands its risk-management footprint and its ability to provide a best-in-class standard of customer solutions by integrating both businesses into its portfolio of risk management, compliance and data offerings. The impact of the deal is likely to be seen in the to-be-reported quarter.

Management remains optimistic about the company’s future performance, given its constant endeavors to implement core strategies and progress toward achieving its financial goals. We believe that its cost-containment efforts, share buyback plan and impressive performance of the underlying subscription revenues (which account for most of the total revenue) bode well. However, adverse currency fluctuations may play a spoilsport in the quarter to be reported.

The company’s core subscription businesses continued to perform well and it is encouraging to see its Financial business reporting positive organic 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. Further, the company aims to boost its organic growth via strategic investments in its highest growth market.

Stocks to Consider

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

Crestwood Equity Partners LP (NYSE:CEQP) , with an Earnings ESP of +160.00%, and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Railcar Industries, Inc. (NASDAQ:ARII) , with an Earnings ESP of +8.07%, and a Zacks Rank #2.

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