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What to expect from Thomson Reuters' Q3 earnings

A US investment research firm issued a cautious forecast for Thomson Reuters' third quarter earnings report due to be announced on Friday.

Chicago-based Zacks told clients: “Management, through top-line growth, cost-containment and share buyback strategies, remains focused on augmenting the company’s bottom-line results. On the other hand, adverse currency fluctuations may play a spoilsport in the quarter to be reported.”

Management has previously reiterated its guidance for the quarter, in which it expects organic revenues to have increased.

“Our proven model does not conclusively show that Thomson Reuters is likely to beat estimates this quarter," Zacks said. "This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here…”

ESP is Expected Surprise Prediction, a metric that looks for earnings surprises by focusing on the most recent analyst revisions.

Zacks said Thomson Reuters carries a Zacks Rank #4 (Sell) and noted: “We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.” ■