Valued at a market cap of $120 billion, Thomson Reuters (TSX:TRI) is among the largest companies in Canada. In the last 10 years, TRI stock has returned more than 500% to shareholders after adjusting for dividend reinvestments. In this period, the TSX index has returned “just” 140% in dividend-adjusted gains.
Let’s see if this blue-chip TSX stock trades at a reasonable valuation in May 2025 and if it can continue to deliver outsized gains over the next five years.
Is this TSX stock a good buy right now?
Thomson Reuters is a global content and technology company operating through five segments: Legal Professionals, Corporates, Tax & Accounting Professionals, Reuters News, and Global Print. It provides research tools, workflow solutions, news services, and artificial intelligence (AI)-powered technologies to law firms, governments, businesses, accounting professionals, and media organizations worldwide.
Thomson Reuters continues to demonstrate strong performance in 2025, with its strategic focus on content-driven technology fueling steady growth across its core segments. The Canadian giant reported 6% organic revenue growth in the first quarter (Q1), with the “Big 3” segments (Legal, Corporate, and Tax & Accounting) growing at an impressive 9%.
CEO Steve Hasker emphasized that 90% of Thomson Reuters’s business consists of content-enabled software serving the legal, tax, accounting, and compliance professions. This focus has transformed the revenue mix, with products growing at double-digit rates, now accounting for 25% of total revenue, up from just 11% in 2019.
The company’s investment in generative AI is paying dividends, with 20% of its annualized contract value now coming from GenAI-enabled products. Thomson Reuters is investing $200 million annually in AI capabilities, split between operating expenses and capital expenditures. Recent AI-driven acquisitions like Casetext (CoCounsel), SurePrep, SafeSend, and Materia are performing well and strengthening its competitive position.
Despite market uncertainty around tariffs and other economic headwinds, Thomson Reuters has not experienced any changes in the demand environment. Its resilient business model, with over 80% recurring revenue and a highly diversified customer base providing non-discretionary products, positions TRI well for various economic scenarios.
Management confidently reaffirmed its full-year 2025 guidance, projecting over 7% organic growth, with the big three segments growing approximately 9%. Thomson Reuters anticipates adjusted EBITDA margins of approximately 39%, up 75 basis points from 2024.
Is Thomson Reuters stock undervalued right now?
With $10 billion in capital capacity through 2027 and a net leverage ratio of just 0.6 times, Thomson Reuters is well-positioned to pursue strategic acquisitions. It should also maintain its commitment to return 75% of free cash flow to shareholders through dividends and share repurchases. The company recently increased its dividend by 10% for the fourth consecutive year.
Analysts expect the TSX stock to increase sales from $7.26 billion in 2024 to $9.76 billion in 2029. Comparatively, adjusted earnings are forecast to expand from $3.77 per share to $6.11 per share.
Thomson Reuters stock currently trades at a trailing price-to-earnings multiple of over 70 times, which is quite steep. Even if TRI stock trades at 50 times trailing earnings, it will be priced at $305 in May 2030, above the current trading price of $267.
Given the lofty valuation of the TSX stock, Thomson Reuters will likely underperform the broader markets in the near term.
