Comparing LegalZoom.com (NASDAQ:LZ) and Thomson Reuters (NASDAQ:TRI)

LegalZoom.com (NASDAQ:LZ) and Thomson Reuters (NASDAQ:TRI) are both industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, valuation, dividends and risk.

Analyst Recommendations

This is a summary of current recommendations for LegalZoom.com and Thomson Reuters, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LegalZoom.com	2	6	0	0	1.75
Thomson Reuters	0	6	11	0	2.65

LegalZoom.com presently has a consensus price target of $7.30, indicating a potential upside of 4.43%. Thomson Reuters has a consensus price target of $127.42, indicating a potential upside of 3.45%. Given LegalZoom.com’s higher possible upside, research analysts clearly believe LegalZoom.com is more favorable than Thomson Reuters.

Risk & Volatility

LegalZoom.com has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500. Comparatively, Thomson Reuters has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Insider and Institutional Ownership

82.0% of LegalZoom.com shares are held by institutional investors. Comparatively, 17.3% of Thomson Reuters shares are held by institutional investors. 7.4% of LegalZoom.com shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares LegalZoom.com and Thomson Reuters”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LegalZoom.com	$756.04 million	1.58	$15.43 million	$0.09	77.67
Thomson Reuters	$7.48 billion	7.14	$1.50 billion	$3.76	32.76

Thomson Reuters has higher revenue and earnings than LegalZoom.com. Thomson Reuters is trading at a lower price-to-earnings ratio than LegalZoom.com, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares LegalZoom.com and Thomson Reuters’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LegalZoom.com	2.13%	15.83%	5.08%
Thomson Reuters	21.22%	15.82%	10.27%

Summary

Thomson Reuters beats LegalZoom.com on 8 of the 14 factors compared between the two stocks.

About LegalZoom.com

LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company’s platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Mountain View, California.

About Thomson Reuters

Thomson Reuters Corporation provides business information services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates in five segments: Legal Professionals, Corporates, Tax & Accounting Professionals, Reuters News, and Global Print. The Legal Professionals segment offers research and workflow products focusing on legal research and integrated legal workflow solutions that combine content, tools, and analytics to law firms and governments. The Corporates segment provides a suite of content-enabled technology solutions for legal, tax, regulatory, compliance, and IT professionals. The Tax & Accounting Professionals segment offers research and workflow products focusing on tax offerings and automating tax workflows to tax, accounting, and audit professionals in accounting firms. The Reuters News segment provides business, financial, and international news to media organizations, professional, and news consumers through news agency and industry events. The Global Print segment offers legal and tax information primarily in print format to legal and tax professionals, governments, law schools, and corporations. The company was formerly known as The Thomson Corporation and changed its name to Thomson Reuters Corporation in April 2008. The company was founded in 1851 and is headquartered in Toronto, Canada. Thomson Reuters Corporation is a subsidiary of The Woodbridge Company Limited.