Thomson Reuters Delivers on 2025 Guidance but Faces Uphill Battle on Margins and Competition

What happened

Thomson Reuters reported solid fourth-quarter and full-year 2025 results, meeting its outlook with 7% organic revenue growth and 9% growth in its core 'Big 3' segments. The company issued a 2026 framework anticipating organic growth of 7.5-8.0% and adjusted EBITDA margin expansion of approximately 100 basis points from 39.2% in 2025, alongside a 10% dividend increase to $2.62 per share. Despite these positive developments, the stock has declined about 24% over the past year to around $123, reflecting persistent investor skepticism over AI-driven competition and high valuations highlighted in prior analyses. CEO Steve Hasker emphasized AI investments are paying off, but a critical look suggests the margin expansion target may be optimistic given ongoing R&D costs and intensifying rivalry from LexisNexis and Harvey. The results underscore TRI's operational resilience, yet they do not fully alleviate concerns about its ability to translate growth into sustainable profit improvements in a rapidly evolving market.

Implication

The 2025 results and 2026 outlook validate TRI's ability to sustain high-single-digit organic growth, supporting the base scenario of steady but unspectacular progress. However, the projected margin expansion relies heavily on AI monetization, which faces headwinds from aggressive competitors like RELX and Harvey, potentially capping pricing power. TRI's dividend increase and solid cash flow provide downside protection, but at ~31x P/E and ~19x EV/EBITDA, the stock remains expensive unless margins improve decisively. Investors should monitor upcoming quarters for signs that AI-enabled ACV mix rises meaningfully above 22% and that legal segment growth keeps pace with RELX's ~9% rate. Until then, the risk-reward favors waiting for a lower entry price near $110 or concrete indicators that TRI can defend its moat and expand margins as guided.

Thesis delta

The 2025 results and 2026 outlook align with the DeepValue report's base case, confirming TRI's ability to deliver 7-8% organic growth, but they do not materially shift the thesis. While the improved margin guidance offers a slight positive tilt, it remains contingent on successful AI execution amid competitive pressures, keeping the 'WAIT' rating intact. Investors should still seek either a lower valuation or clearer evidence of AI-led pricing power before increasing exposure.