TFI International Inc (TFII, Financial) has recently shown a notable daily gain of 8.08%, and although its 3-month gain is a modest 1.63%, the company's Earnings Per Share (EPS) stands at a solid 6.03. With these figures in mind, investors may ponder if the stock is modestly overvalued. This article delves into the valuation analysis of TFI International, providing investors with a deeper understanding of the company's market position and potential investment worth.
Company Overview
TFI International Inc is a prominent player in the transportation and logistics industry, headquartered in Canada. The company's operations are segmented into package and courier, less-than-truckload, truckload, and logistics, catering to a diverse range of transportation needs across North America. With a current stock price of $132.32 and a GF Value of $109.94, TFI International presents an intriguing case for valuation. The company's market cap stands at $11.30 billion, indicating a significant presence in the market. This introduction sets the stage for a detailed examination of TFI International's intrinsic value and market performance.
Understanding GF Value
The GF Value is a unique valuation metric that estimates the intrinsic value of a stock, taking into account historical trading multiples, a GuruFocus adjustment factor for past performance and growth, and future business performance projections. If a stock trades significantly above the GF Value Line, it might be overvalued with potentially lower future returns. Conversely, a price below the GF Value Line suggests undervaluation and possibly higher future returns. TFI International, with a market cap of $11.30 billion and a current price of $132.32, appears to be modestly overvalued according to the GF Value.
Given its valuation status, TFI International's long-term stock performance might yield returns that are less than the company's business growth trajectory.
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Financial Strength and Stability
Investing in companies with robust financial strength is essential to minimize the risk of capital loss. TFI International's financial strength, with a cash-to-debt ratio of 0.04, is fair, albeit lower than the industry average. This metric, along with the company's interest coverage, provides insight into its financial stability and debt management.
Profitability and Growth Prospects
A hallmark of a less risky investment is consistent profitability. TFI International has a commendable track record, with high profit margins indicating a robust financial performance. With a revenue of $7.50 billion and an operating margin of 9.63%, the company's profitability is strong. Additionally, TFI International's growth rate, particularly its average annual revenue increase of 29.6%, positions it well above many peers in the transportation industry.
ROIC vs. WACC: A Measure of Value Creation
Comparing Return on Invested Capital (ROIC) with the Weighted Average Cost of Capital (WACC) is crucial in assessing a company's value creation. TFI International's ROIC of 11.48% surpasses its WACC of 10.16%, indicating effective capital management and shareholder value generation.
Final Thoughts on TFI International's Valuation
In conclusion, TFI International Inc (TFII, Financial) is considered modestly overvalued, yet the company boasts a fair financial condition, strong profitability, and impressive growth that surpasses the majority of its industry counterparts. For a comprehensive understanding of TFI International's financial health, investors are encouraged to explore the company's 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.
