TFI International Inc (TFII-T)

Post-election in the US, prospects for the US economy and domestic manufacturing will be good for the transportation sector as a whole. This name stands to benefit.

A new addition to his dividend growers mandate. Top flight management team. Lean operating philosophy to maximize efficiently matching freight with trucks. Company's discipline is its magic. History of consolidation. Two years of a manufacturing and freight recession may be turning a corner. Sees it returning to double-digit earnings growth next quarter and accelerating. Analysts see 27% EPS growth in 2025, 24% in 2026. 

Trades at 18x PE, a good combination of value and growth. Compound earnings growth of 20% over the last 5 years, sees that accelerating. Yield is 1.31%.

Tough slog for freight traffic. Hard to know if that's cyclical, or because we're coming off the insane activity of 2021. Unionized, whereas some competitors are not. Not a great quarter; UPS Freight acquisition hasn't panned out as expected.

Thing is, it generated $270M USD of free cashflow in a very poor quarter. Insanely great. Tells you how well it will do when market picks up. Will eventually split into 2 companies, and valuation gap with US peers will narrow.

EPS of $1.60 missed estimates of $1.78; revenue of $2.185B missed estimates of $2.27B. EBITDA of $357.2M missed estimates of $371.2M. EPS did rise from $1.57 last year. Revenue rose 14% with acquisitions helping. Truckload revenue rose 80%, logistics rose 2.5%. Operating income rose 1.3%. The dividend was raised by 13%. The company noted "Business conditions for US LTL are challenging". Still free cash flow was $270M, up 37% from the prior year. We expect investors will be a bit disappointed, with the dividend hike offsetting a bit. We would be OK buying some if it dips a few dollars, but the after market trading right now is quite muted, at least so far (down 1.3%). 
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Well run, but very cyclical. Its collection of assets is not worthy of the multiple. Rail is the most efficient way to ship freight. In this higher inflationary environment, he'd prefer a rail such as CNR or CP.

TFII had two price target cuts on Tuesday. CIBC's analyst suggested that this was to reflect, "mid-quarter updates provided by a number of US LTL companies, which pointed to a weaker-than-expected August." It seems that there are some near term headwinds related to softer volumes. The business is sensitive to the macroeconomy and can also be cyclical. We still view TFII very positively but would keep a close eye on upcoming quarterly results. 
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Has been watching business for a long term. Not a capital light business. Long term, company has been good at increasing shareholder wealth. Worth investigating for interested investors. Doesn't own shares at this time, but could be a good investment. 

Likes the company, not trucking. Smart managers who have been good operators, and smart capital allocators. But trucking is in a tough space now with lower rates. A long-term compounder that gains more and more market share.

Up 17% YTD, so not much of a pullback. On a YTD basis, outperforming the railroads. He likes both those businesses. Canada has good geography for trucking and infrastructure. TFII is a great acquirer and integrator of other companies. Rumours that UPS wants to unload less-than-truckload; perhaps TFII could bid for it. Balance sheet in great shape, more acquisitions to come.

CNR is the laggard. CP is doing nicely. He still regrets not switching from CNR to CP.

Recent weakness in business has been fixed. Free cash flow is starting to rise. Expecting earnings to rise. M&A should pickup again. Balance sheet is in good shape. Expecting share price to rise from here. 

We continue to like the stock a lot, but following recent earnings it may not have a short term catalyst for a bounce. We would be comfortable selling/rebuying, especially considering capital gains tax changes next month. 
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Good move to trim, as it got ahead of itself on moving averages and such. Don't sell any more. Great stock. Poor reaction to earnings, but US light trucking showing signs of meaningful improvement. FCF remains strong, pretty good 2024 guidance. Sees EPS rebound in second half. Spinout coming. Trades at 15x, growing at 21%.

It did very well during Covid, but post-Covid logistics companies are giving back ground. It will be bumpy, but you will be fine with this long term.

Diverse customer base. US market represents about 70% of revenue. Profitability above stock market average, and has been for 5-6 years. Balance sheet has more leverage than what he's comfortable with. 20x PE, considerably more expensive than TSX at 16x. Wait for a considerable drop to $170-175. Yield is only 1%.

Economy continues to be resilient. Leading indicators have turned positive, after being negative for 18 months. PMI data turned back north of 50. IYT is the transport ETF, behaving well. Recently made new highs after consolidating. Great company, in a sector he'd like to own.