A lackluster earnings announcement from Thomson Reuters Corporation (TSE:TRI) last week didn't sink the stock price. However, we believe that investors should be aware of some underlying factors which may be of concern.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.TSX:TRI Earnings and Revenue History May 10th 2025

How Do Unusual Items Influence Profit?

For anyone who wants to understand Thomson Reuters' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from US$196m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And, after all, that's exactly what the accounting terminology implies. If Thomson Reuters doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Thomson Reuters' Profit Performance

Arguably, Thomson Reuters' statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Thomson Reuters' statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 35% per annum growth in EPS for the last three. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 1 warning sign for Thomson Reuters you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Thomson Reuters' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or  this list of stocks with high insider ownership.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

View Comments