Will the share repurchase materially affect TRI's cash reserves or leverage ratios, and what are the implications for future capital allocation?
Impact on cash and leverage
Thomson Reuters (TRI) entered 2025 with roughly $6‑7 billion of cash and market‑able securities and a net‑debt position of about $2 billion, giving it a net‑cash balance of roughly $4‑5 billion and a leverage ratio (net‑debt/EBITDA) comfortably below 2 ×. A $1 billion normal‑course‑issuer‑bid therefore represents roughly 15‑20 % of the company’s cash pool. Even if the full program is executed in a single year, the cash draw‑down will leave TRI with ~ $5‑6 billion of liquidity, well above the level needed to fund its 2025‑26 capital‑expenditure plan and dividend policy. Consequently, the buy‑back will not materially erode cash reserves nor push the leverage ratio into a risk‑ier zone; the firm will still sit comfortably in the “strong‑balance‑sheet” category.
Implications for future capital allocation
The size of the repurchase signals management’s confidence that the stock is undervalued and that the balance sheet is robust enough to allocate capital to shareholder returns without jeopardising growth initiatives. Expect the dividend payout ratio to remain stable (≈ 50 % of cash flow) and the company to continue modest cap‑ex spending on its AI‑driven content and data platforms. The buy‑back therefore likely reflects a temporary allocation of excess cash rather than a shift away from long‑term investment. In practice, the market will price in the incremental EPS boost, providing upside potential for the stock if the repurchase proceeds as planned.
Trading takeaway
- Short‑term: The announcement should lift TRI’s price modestly (the 70‑point sentiment bias and the low‑cost, cash‑rich buy‑back are bullish catalysts). Traders can look for a break‑above the $78‑$80 resistance on volume as a signal to add to long‑positions or to buy on any pull‑back to the $75‑$77 support zone, where the risk‑reward remains attractive given the low likelihood of a cash‑crunch.
- Medium‑term: Keep an eye on the quarterly cash‑flow statement; if the NCIB is throttled (e.g., due to higher‑than‑expected capital‑expenditure or a dip in operating cash), a re‑assessment of the buy‑back size could be warranted. In that scenario, a partial‑sell‑off may become prudent if the price has run too far ahead of fundamentals. Otherwise, the strong balance sheet and continued dividend support make TRI a bullish‑biased holding for investors seeking a blend of income and modest upside.