What Lies Ahead for Thomson Reuters (TRI) in Q3 Earnings?

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Thomson Reuters CorporationTRI is slated to report third-quarter 2017 results before the market opens on Nov 1. In the previous quarter, the company's earnings surpassed the Zacks Consensus Estimate by 9 cents.

Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a positive earnings surprise of 13.1%. 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 this Quarter

Thomson Reuters continues to benefit from greater operating leverage and is likely to record higher revenues and margins in the impending 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 (which account for most of the total revenues) bode well.

The company's core subscription businesses continued to perform well and it is encouraging to see its Financial business reporting 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.

Thomson Reuters expects its underlying fundamentals to improve in the second half of the year. The company also expects to benefit from its integrated technology 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 -2.33%. 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

Thomson Reuters Corp Price and EPS Surprise | Thomson Reuters Corp Quote

Zacks Rank: Thomson Reuters has a Zacks Rank #3. While this increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

Note that 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:

KEMET Corporation KEM has an Earnings ESP of +7.46% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

LendingClub Corporation LC has an Earnings ESP of +5.00% and a Zacks Rank #3.

Eaton Vance Corp. EV has an Earnings ESP of +0.57% and a Zacks Rank #3.

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Thomson Reuters Corp (TRI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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