Thomson Reuters (TRI) investment Quality Rating (AA)

(AA) | Technology | Data & Analytics
By: Old York Financial
A Private Principal Report

the verdict

Old York Financial has assigned Thomson Reuters (TRI) an Operational Quality (AA) Rating. TRI is a "High-Floor, High-Ceiling" data monopoly. It earns an (AA) because it has successfully transitioned from a "News and Terminal" business into a GenAI-driven software engine.

While its reported ROIC (9-10%) looks pedestrian due to its $12.7 Billion Goodwill pile, its Adjusted Operational ROIC when removing the "M&A Bloat" is well north of 25%. With 84% recurring revenue and a 0.6x leverage ratio, it is one of the most structurally sound balance sheets in the Registry

the old york analysis

owner earnings: the recurring gold mine

Thomson Reuters sells "Certainty" to lawyers and accountants. That is the highest-margin product on earth.

• 2025 Net Cash from Operations: $2.65 Billion

• (-) Accrued CapEx (8.2% of Revenue): ($0.61 Billion)

• (+) Depreciation & Software Amortization: $0.83 Billion

• OLD YORK OWNER EARNINGS: $2.87 Billion

• Analyst Note: TRI is currently "Over-Investing" in AI ($100M+ per year), which temporarily suppresses FCF. Even with this aggressive spend, they generate nearly $3B in stay-in-place cash flow.

growth & market dominance

• The "Big 3" Moat: Legal, Corporates, and Tax/Audit grew 9% organically in 2025. This is where the pricing power lives. If you are a Tier-1 Law Firm, you cannot fire Westlaw; you just pay the 5-7% annual increase.

• The AI Pivot (CoCounsel): TRI has moved faster than almost any "legacy" firm on AI. 28% of their ACV (Annual Contract Value) is now tied to GenAI-enabled products. They aren't being disrupted; they are the disrupter.

• LSEG Stake: They have been systematically selling their London Stock Exchange Group (LSEG) stake to fund $1B+ in annual buybacks. This is a "Shadow Balance Sheet" that most analysts ignore.

operational efficiency

• 5-Year ROIC (Avg): 7.64%

• 5-Year EPS CAGR: -8.67%

• 5-Year Price CAGR: 4.80%

• Share Change (5Y): -10.23%

• Moat Type: Oligopoly

the fortress check

• Net Debt to EBITDA: 0.6x (Stupidly strong).

• Capital Allocation: The "Shareholder Cannibal" phase. In 2025, they repurchased $1.0 Billion in shares. For 2026, they just announced an additional $600M buyback and a $605M special capital return.

• Dividend: 33 consecutive years of increases. They are a "Compounder Sovereign."

why it’s not rated (AAA)

1. The Global Print Anchor: They still have a shrinking "Books" business (Global Print) that declined 6% in 2025. An (AAA) company should not have a "melting ice cube" segment, even if it's small.

2. Goodwill Weight: Until that $12.7B in intangibles is further amortized or matched by even higher earnings, the "Return on Total Assets" remains in the (AA) tier.

3. M&A Reliance: To stay at (AA), they must continue to buy companies like SafeSend and Pagero. This introduces "Integration Friction" that a pure organic (AAA) doesn't have.

final determination

• Rating: Old York Quality (AA)

• Classification: The Analytics Sovereign.

• Thomson Reuters is the ultimate "Mission Critical" business. It receives an (AA) because its revenue is essentially a "Tax" on the legal and accounting professions. It is the highest-quality data asset in the Canadian market.

Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager.