TFI International: Hold Rating Amidst Industry Challenges and Operational Headwinds

Bank of America Securities analyst Ken Hoexter reiterated a Hold rating on TFI International (TFII – Research Report) on April 26 and set a price target of $148.00.

Ken Hoexter has given his Hold rating due to a combination of factors affecting TFI International’s financial performance and industry conditions. TFI International reported an adjusted EPS of $1.24 in the first quarter of 2024, a 7% decrease from the previous year, falling short of both Bank of America Securities’ estimate and the consensus. This shortfall was primarily attributed to the underperformance of its non-LTL (Less-than-Truckload) segments, including Truckload, Package & Courier, and Logistics, which did not meet expected targets. Additionally, the overall weakness in the Truckload and Logistics sectors is reflective of broader market pressures and an extended freight downcycle that has impacted rates and demand.
Despite these challenges, there are positive indicators within TFI International’s LTL operations. The company is experiencing a turnaround, particularly in the U.S. LTL sector, with a noted increase in tonnage and a strategic focus on adding heavier-weighted freight. However, the process of service improvement is expected to be gradual, as evidenced by a deterioration in the U.S. LTL damage claims ratio. The company’s capacity issues, with a current 35% excess, are also being addressed with plans to reduce it over the next few years. The recent Daseke acquisition, although EPS-neutral in the first year, is another factor to consider in the company’s future financial performance. Consequently, while Hoexter acknowledges the company’s strategic efforts and potential for service gains, the persistence of macroeconomic pressures and the need for operational improvements have led to the Neutral rating and a lowered price objective.

Hoexter covers the Industrials sector, focusing on stocks such as Westinghouse Air Brake Technologies, United Parcel, and Canadian National Railway. According to TipRanks, Hoexter has an average return of 3.9% and a 52.83% success rate on recommended stocks.

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TFI International (TFII) Company Description:

TFI International, Inc. provides freight transportation and logistics services. It operates through the following segments: Package & Courier, Less-Than-Truckload, Truckload, and Logistics. The Package & Courier segment engages in pickup, transport, tracking and delivery of items across North America. The Less-Than-Truckload segment offers pickup, consolidation, transport and delivery of smaller loads. The Truckload segment includes expedited transportation, flatbed, container and dedicated services. The Logistics segment provides asset-light logistics services. The company was founded in 1957 and is headquartered in Saint-Laurent, Canada.