Industrials

Thomson Reuters
Thomson Reuters Jonathan Poland

Thomson Reuters Corporation (TRI), headquartered in Toronto, Canada, is a global provider of business information services. The company’s operations span the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Thomson Reuters operates through five segments: Legal Professionals, Corporates, Tax & Accounting Professionals, Reuters News, and Global Print.

The Legal Professionals segment provides integrated legal research and workflow solutions, combining content, tools, and analytics catered to law firms and governments. The Corporates segment delivers content-enabled technology solutions focusing on legal, tax, regulatory, compliance, and IT professionals. The Tax & Accounting Professionals segment supplies tax-focused research and workflow products designed to automate tax workflows for accounting firms’ tax, accounting, and audit professionals.

Reuters News, another segment, furnishes business, financial, and international news to professional and general news consumers. Its offerings are distributed through Reuters News Agency, Reuters.com, Reuters Events, other Thomson Reuters products, and to financial market professionals. The Global Print segment primarily provides legal and tax information in print format to legal and tax professionals, governments, law schools, and corporations. The company, founded in 1851, was formerly known as The Thomson Corporation and adopted its current name, Thomson Reuters Corporation, in April 2008. It operates as a subsidiary of The Woodbridge Company Limited.

May 14, 2023

In the last twelve months alone, the company generated $1.39 billion in net income on $6.63 billion in revenue at a 39% gross margin. This level of profitability is far higher than the sector median 30%, and helps Thomson Reuters remain an industry leader. While its classified as a Specialty Business or a Research and Consulting Service, it’s mainly just a content creator. No media company should be priced north of 10x sales with artificial intelligence about to make it cheaper than ever to compete. Despite tracing its roots back to the 1850’s, today’s Thomson Reuters has zero competitive advantages and could go the way of Yahoo, which is still a useful site, just far less valuable than it was 20 years ago. 

Atkore Inc.
Atkore Inc. Jonathan Poland

Atkore Inc. (ATKR), a leading industrial products manufacturer, has three major segments: Electrical, Cable Solutions, and Tubing Solutions. The Electrical segment produces conduit and cable management solutions for commercial, industrial, and residential electrical systems. The Cable Solutions segment offers cable management solutions for the communications and energy industries. Lastly, the Tubing Solutions segment produces metal tubing products for HVAC, refrigeration, and industrial applications.

as of February 9, 2023

M&A has created a strong and durable competitive advantage for Atkore as the company continues to beat earnings estimates. Now guiding for a per share profit north of $16 on the low side for 2024, and with the median P/E ratio for the sector at 17x the stock could be a $200 number. We’ll see, but what Atkore does provide for long-term investors is incredibly stable financial standing. On $3.9 billion in sales, 42% comes down as gross profit and then 23% as net profit. What is really important here is that Atkore can do this with less than $2.6 billion in total assets, of which only $900 million is allocated toward Property, Plan, and Equipment (PPE). This is why return on assets is 32% and return on equity is 78% currently.

Fedex Corporation
Fedex Corporation Jonathan Poland

Established in 1971, FedEx Corporation (FDX) is a leading transportation, e-commerce, and business services company with operations in the US and internationally. Its FedEx Express unit provides express delivery, small-package ground delivery, freight transportation, time-critical transportation solutions, and cross-border e-commerce technology services. The FedEx Ground division offers guaranteed delivery services to both businesses and homes. The FedEx Freight segment provides less-than-truckload shipping services, with a fleet of 30,000 vehicles and 400 service centers. The FedEx Services unit offers sales, marketing, IT, customer service, communications, billing, back-office support and other support services. The Corporate, Other and Eliminations division offers integrated supply chain management, specialty transportation, customs brokerage, ocean and air freight forwarding, document and business services, and retail package transportation access to customers.

as of February 8, 2023

Is it worth $100 billion with UPS valued at $160 billion? Yes. That means the current $50 billion cap makes the stock undervalued. UPS generates $11 billion a year in net earnings on $23.6 billion in gross profit and $101 billion in revenue. FedEx generates a very similar amount of gross profit ($23 billion) on slightly lower revenue of $94 billion, but less of that gets pushed to the bottom line. FedEx’s net income was just $3.3 billion in the last 12 months while UPS earned over $11.5 billion. UPS will likely remain the leader, but FedEx could fix its debt problem and close ground.

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