Contrasting Thomson Reuters (TRI) & Wolters Kluwer (WTKWY)

Thomson Reuters (NYSE: TRI) and Wolters Kluwer (OTCMKTS:WTKWY) are both large-cap business services companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Thomson Reuters and Wolters Kluwer, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Thomson Reuters 2 7 5 0 2.21
Wolters Kluwer 0 0 0 0 N/A

Thomson Reuters presently has a consensus target price of $50.33, suggesting a potential upside of 26.88%. Given Thomson Reuters’ higher probable upside, analysts clearly believe Thomson Reuters is more favorable than Wolters Kluwer.

Dividends

Thomson Reuters pays an annual dividend of $1.38 per share and has a dividend yield of 3.5%. Wolters Kluwer pays an annual dividend of $0.77 per share and has a dividend yield of 1.5%. Thomson Reuters pays out 55.0% of its earnings in the form of a dividend. Wolters Kluwer pays out 29.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Thomson Reuters has increased its dividend for 10 consecutive years. Thomson Reuters is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Thomson Reuters has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500. Comparatively, Wolters Kluwer has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Insider & Institutional Ownership

25.6% of Thomson Reuters shares are held by institutional investors. Comparatively, 0.1% of Wolters Kluwer shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Thomson Reuters and Wolters Kluwer’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Thomson Reuters 12.31% 13.61% 6.80%
Wolters Kluwer N/A N/A N/A

Valuation & Earnings

This table compares Thomson Reuters and Wolters Kluwer’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Thomson Reuters $11.33 billion 2.48 $1.40 billion $2.51 15.80
Wolters Kluwer $5.00 billion 3.07 $756.85 million $2.62 20.18

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

Summary

Thomson Reuters beats Wolters Kluwer on 10 of the 14 factors compared between the two stocks.

Thomson Reuters Company Profile

Thomson Reuters Corp (Thomson Reuters) is a Canada-based provider of news and information for professional markets. The Company is organized in three business units: Financial & Risk, Legal, and Tax & Accounting. The Financial & Risk unit is a provider of critical news, information and analytics, enabling transactions and connecting communities of trading, investment, financial and corporate professionals. The Legal unit is a provider of critical online and print information, decision tools, software and services that support legal, investigation, business and government professionals around the world. The Tax & Accounting unit is a provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government. The Company also operates Reuters, Global Growth Organization (GGO) and Enterprise Technology & Operations (ET&O). Thomson Reuters operates in over 100 countries.

Wolters Kluwer Company Profile

Wolters Kluwer N.V., together with its subsidiaries, provides information, software, and services in Europe, North America, the Asia Pacific, and internationally. The company operates through four divisions: Health; Tax & Accounting; Governance, Risk & Compliance; and Legal & Regulatory. The Health division offers solutions in the areas of clinical decision support, clinical drug information, patient engagement, clinical terminologies, clinical surveillance, nursing education and practice, medical research, and continuing education services; and medical, nursing, and allied health journal and book publishing solutions to healthcare professionals, medical librarians, and corporate researchers. The Tax & Accounting division provides solutions in the areas of compliance, collaboration, internal and external audit management, and firm management to accounting firms; corporate finance, tax, and auditing departments; government agencies; corporations; libraries; and universities. The Governance, Risk & Compliance division offers solutions, such as legal compliance and enterprise-wide legal management, as well as addresses regulatory and industry requirements through workflow, analytics, and reporting solutions and services in financial markets. This division serves corporations and small business owners in various industries; banks; and securities and insurance firms. The Legal & Regulatory division provides information, analytics, software, and integrated workflow solutions to law firms, corporate legal departments, corporations, universities, and government agencies. Wolters Kluwer N.V. was founded in 1836 and is headquartered in Alphen aan den Rijn, the Netherlands.

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