Intrinsic Value TFI International Inc. (TFII.TO)

• Previous Close: $146.33
• Intrinsic Value: $47.42
• Upside potential: -68%

Stock Valuation Context

Business Model And Market Position

TFI International Inc. is a leading North American transportation and logistics company, operating across the U.S., Canada, and Mexico. The company’s diversified business model spans four key segments: Package and Courier, Less-Than-Truckload (LTL), Truckload (TL), and Logistics. Its Package and Courier segment specializes in time-sensitive deliveries, while LTL focuses on consolidated smaller shipments. The TL segment provides full-load services, including specialized transport, and the Logistics segment offers asset-light solutions like freight brokerage and forwarding. TFI International leverages its extensive fleet of over 13,000 tractors and 50,000 trailers, supplemented by independent contractors, to maintain a competitive edge. The company’s strategic positioning in cross-border logistics capitalizes on North American trade dynamics, supported by its ability to offer integrated, end-to-end solutions. Its scale and operational flexibility allow it to serve a broad customer base, from small businesses to large enterprises, reinforcing its market leadership in the highly fragmented trucking industry.

Revenue Profitability And Efficiency

TFI International reported revenue of CAD 8.4 billion for the latest fiscal period, with net income of CAD 422.5 million, reflecting a net margin of approximately 5%. The company generated CAD 1.06 billion in operating cash flow, demonstrating strong cash conversion. Capital expenditures of CAD 392.8 million indicate ongoing investments in fleet and technology, supporting operational efficiency and growth. The diluted EPS of CAD 4.96 underscores its earnings capacity.

Earnings Power And Capital Efficiency

The company’s earnings power is evident in its ability to sustain profitability despite cyclical industry pressures. With a beta of 1.415, TFI International exhibits higher volatility relative to the market, typical for the transportation sector. Its capital efficiency is supported by a balanced mix of owned and contracted assets, optimizing cost structures while maintaining service reliability. The logistics segment’s asset-light model further enhances returns on capital.

Balance Sheet And Financial Health

TFI International’s balance sheet shows total debt of CAD 2.98 billion, with no reported cash and equivalents, suggesting a leveraged but manageable position given its cash flow generation. The absence of cash holdings may reflect aggressive capital deployment or debt repayment strategies. The company’s ability to service debt is supported by robust operating cash flows, though investors should monitor leverage ratios closely.

Growth Trends And Dividend Policy

The company has demonstrated consistent growth, driven by acquisitions and organic expansion in logistics and specialized trucking. A dividend of CAD 2.50 per share indicates a commitment to shareholder returns, with a payout ratio that appears sustainable given current earnings. Future growth may hinge on cross-border trade trends and efficiency gains from technological investments.

Valuation And Market Expectations

With a market capitalization of CAD 9.97 billion, TFI International trades at a premium reflective of its market leadership and diversified operations. The higher beta suggests investor expectations of cyclical growth, aligned with broader economic trends. Valuation metrics should be weighed against sector peers, considering its unique mix of asset-heavy and asset-light segments.

Strategic Advantages And Outlook

TFI International’s strategic advantages include its scale, geographic diversification, and integrated service offerings. The company is well-positioned to benefit from long-term logistics demand, though near-term performance may be influenced by fuel costs and economic cycles. Its focus on technology and efficiency improvements should support margins, while strategic acquisitions could further solidify its market position.

Sources

Company filings, market data