With a notable daily gain of 8.08%, a modest 3-month gain of 1.63%, and an Earnings Per Share (EPS) of 6.03, TFI International Inc (TFII, Financial) is a company that demands attention. But the question remains: is the stock modestly overvalued? This article delves into a valuation analysis to determine the true worth of TFI International (TFII) in the current market. Read on for a detailed examination of the company's financial health and intrinsic value.
Company Introduction
TFI International Inc is a Canada-based powerhouse in transportation and logistics, with operations spanning package and courier services, less-than-truckload shipping, truckload transportation, and comprehensive logistics solutions. With a current stock price of $132.32 and a GF Value of $114.52, the company stands at a crossroads of valuation. This financial juxtaposition sets the stage for an insightful assessment of TFI International's market standing and potential investment value.
Understanding the GF Value
The GF Value is a unique metric that captures the intrinsic value of a stock based on historical trading multiples, an adjustment factor reflecting past performance, and projected future business outcomes. The GF Value Line is a visual representation suggesting the fair trading value of TFI International (TFII, Financial). When a stock trades significantly above this line, it is considered overvalued, which could imply lower future returns. Conversely, trading below the line might indicate a stock with higher potential returns. TFI International's current market cap of $11.30 billion, coupled with its stock price, suggests that it is modestly overvalued.
Given the relative overvaluation, it's reasonable to predict that TFI International's long-term stock performance may not align with its business growth trajectory.
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Financial Strength
Investing in companies with robust financial strength is crucial to avoid permanent capital loss. TFI International's cash-to-debt ratio of 0.04 positions it unfavorably in comparison to its industry peers. Despite this, the company's financial strength score of 6 out of 10 denotes a fair balance sheet, providing a degree of investment security.
Profitability and Growth
A consistent track record of profitability is a less risky bet for investors. TFI International has maintained profitability for the last decade, showcasing strong financial health. With an annual revenue of $7.50 billion and an EPS of $6.03, the company's operating margin of 9.63% is commendable. This performance earns TFI International a profitability rank of 9 out of 10, signaling robust profitability.
The growth of a company is a vital indicator of its value creation for shareholders. TFI International boasts a 3-year average annual revenue growth rate of 29.6%, outperforming 88.5% of its industry peers. Moreover, its EBITDA growth rate of 30.7% further cements its strong growth prospects.
ROIC vs. WACC
Evaluating a company's profitability can also be achieved by comparing its Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC). Ideally, the ROIC should exceed the WACC, indicating efficient capital utilization. TFI International's ROIC of 11.48 surpasses its WACC of 10.08, illustrating profitable investment returns.
Conclusion
In summary, TFI International (TFII, Financial) appears to be modestly overvalued. The company's financials are solid, with strong profitability and growth exceeding 76.64% of its competitors in the Transportation industry. For a more comprehensive understanding of TFI International's financial journey, interested parties can review its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
