We expect Thomson Reuters Corporation (TRI), provider of information related to financial & risk, legal, tax & accounting, and intellectual property & science, to beat expectations when it reports third-quarter 2014 results on Oct 30. In the last quarter, it had delivered a positive earnings surprise of 8.5%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Thomson Reuters is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Thomson Reuters has the right combination of two key components.
Zacks ESP: Thomson Reuters currently has an Earnings ESP of +2.22%. This is because the Most Accurate estimate stands at 46 cents, while the Zacks Consensus Estimate is pegged at 45 cents.
Zacks Rank: Thomson Reuters carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings estimates. Conversely, the Sell-rated stocks (Rank #4 and 5) should never be considered going into an earnings announcement.
Thomson Reuters’ Zacks Rank #3 and ESP of +2.22% make us reasonably confident of a positive earnings beat.
What is Driving the Better-than-Expected Earnings?
Thomson Reuters remains focused on cost containment, tactful allocation of resources and simplification of its organizational structure in order to exploit growth opportunities and sustain its current momentum. We believe improvement across its Financial & Risk unit will positively impact the quarter.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements:
L Brands, Inc. (LB) has an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy).
The Walt Disney Company (DIS) has an Earnings ESP of +3.41% and a Zacks Rank #2.
Dean Foods Company (DF) has an Earnings ESP of +15.39% and a Zacks Rank #3.
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