Intrinsic Value TFI International Inc. (TFII)

• Previous Close: $107.55
• Intrinsic Value: $33.17
• Upside potential: -69%

Stock Valuation Context

Business Model And Market Position

TFI International Inc. operates as a leading North American transportation and logistics company, specializing in truckload, less-than-truckload (LTL), and package delivery services. The company generates revenue through asset-based and asset-light logistics solutions, serving diverse industries such as retail, manufacturing, and consumer goods. TFI International’s vertically integrated model allows it to optimize efficiency across its network, leveraging scale to compete effectively against both regional carriers and multinational logistics providers. Its strategic acquisitions, such as UPS Freight, have bolstered its LTL segment, enhancing market share in a fragmented industry. The company’s asset-light brokerage and logistics divisions provide higher-margin revenue streams, balancing cyclicality in core trucking operations. TFI International maintains a strong competitive position through cost discipline, technology-driven route optimization, and a decentralized operating structure that empowers local management. This approach enables agility in responding to regional demand shifts while maintaining service quality. The company’s focus on cross-selling logistics services to existing customers further strengthens client retention and revenue diversification.

Revenue Profitability And Efficiency

TFI International reported revenue of $8.4 billion for FY 2024, with net income of $422.5 million, reflecting a net margin of approximately 5%. Diluted EPS stood at $4.96, supported by disciplined cost management and operational leverage. Operating cash flow of $1.06 billion underscores strong cash generation, while capital expenditures of $393 million indicate ongoing investments in fleet modernization and technology. The company’s asset turnover and working capital efficiency remain competitive within the logistics sector.

Earnings Power And Capital Efficiency

The company’s earnings power is driven by its diversified service mix, with higher-margin logistics segments offsetting cyclical pressures in truckload. ROIC trends reflect effective capital allocation, particularly in acquisitions that expand geographic or service capabilities. TFI International’s capital-light brokerage operations contribute disproportionately to returns, while asset-based segments benefit from scale. Free cash flow conversion remains robust, enabling deleveraging and shareholder returns.

Balance Sheet And Financial Health

TFI International carries $2.98 billion in total debt, with no reported cash balance, suggesting reliance on revolving credit facilities for liquidity. The debt/EBITDA ratio warrants monitoring given industry cyclicality, though cash flow coverage appears adequate. The absence of cash holdings may reflect aggressive capital deployment, but the company’s asset base provides collateral flexibility. Dividend payments and share repurchases are supported by operating cash flows.

Growth Trends And Dividend Policy

Organic growth is tempered by industry-wide freight demand softness, though acquisitions provide incremental revenue. The $1.80 annual dividend per share yields approximately 1.5%, with a payout ratio near 36%, indicating room for sustained distributions. Share count reduction through buybacks could enhance EPS growth. Long-term trends favor TFI International’s exposure to outsourced logistics and e-commerce tailwinds, albeit with near-term macroeconomic sensitivity.

Valuation And Market Expectations

At a P/E of ~12x (based on FY2024 EPS), TFI International trades at a discount to asset-light logistics peers but in line with asset-heavy trucking companies. The valuation reflects balanced expectations for moderate yield improvement and disciplined M&A. Investors appear to price in stable free cash flow rather than aggressive top-line expansion, given current freight market conditions.

Strategic Advantages And Outlook

TFI International’s decentralized model and acquisition expertise provide a durable competitive edge. Near-term challenges include spot rate volatility and driver shortages, but the company’s diversified model mitigates these risks. Long-term opportunities lie in logistics integration and technology adoption to improve density and pricing power. Management’s track record in capital allocation supports cautious optimism for value creation across cycles.

Sources

Company 10-K, investor presentations