On Wednesday, Susquehanna's analysis of TFI International (NYSE:TFII) led to a reduction in the company's price target to $170 from $180, while the firm sustained a Positive outlook on the stock. The adjustment follows TFI International's announcement that its year-over-year earnings per share (EPS) would remain relatively flat, aligning with the anticipated range of $6.00 to $6.50. This projection was expected by the investment community.
The analyst from Susquehanna highlighted several factors to remain optimistic about TFI International's performance heading into the years 2025-2026. These include significant potential for growth in less-than-truckload (LTL) and truckload (TL) services, leveraging the assets acquired from Daseke (NASDAQ:DSKE) Inc., robust free cash flow, and the ongoing reduction of debt and interest expenses. Additionally, there are indications of a potential major transaction in the second half of 2025.
TFI International reported its third-quarter 2024 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) at $357 million. This figure fell short of Susquehanna's estimate by $23 million and was $17 million below the consensus estimate. Despite this, the firm's long-term perspective on TFI International remains unchanged.
The company's financial health is further underscored by the analyst's commentary on the strong free cash flow and the strategic moves to reduce debt and interest, which are seen as positive indicators for future financial stability and growth potential.
Susquehanna's continued Positive rating suggests confidence in TFI International's strategic direction and its ability to capitalize on market recoveries, particularly in the LTL and TL sectors. The anticipation of another significant deal in the latter half of 2025 also adds to the reasons for maintaining a bullish stance on the company's stock.
In other recent news, TFI International has reported a 17% increase in Q3 revenue, totaling $1.9 billion. The company's free cash flow rose by 37% to $273 million, enabling a $130 million debt reduction within the same quarter.
The operating income for the period reached $203 million, marking a margin of 10.7%. Concurrently, Citi analyst Ariel Rosa reduced the price target for TFI International but maintained a Buy rating, while Stifel downgraded the company's stock from Buy to Hold due to internal challenges that could impact future growth and profitability.
The company also announced the retirement of Neil Manning, an independent director who served on TFI International's board for 11 years. Despite ongoing market challenges, TFI International anticipates a stable performance for 2024, with potential improvements in 2025 if market conditions normalize. CEO Alain Bédard indicated a year-end earnings target of $6.18 to $6.20 per share.
InvestingPro Insights
To complement Susquehanna's analysis, recent data from InvestingPro offers additional context on TFI International's financial position and market performance. The company's market capitalization stands at $11.5 billion, with a P/E ratio of 24.52, indicating investor confidence in its earnings potential. This aligns with the InvestingPro Tip that analysts predict the company will be profitable this year.
TFI International has demonstrated strong financial performance, with revenue growth of 10.38% over the last twelve months and a robust 14.31% growth in the most recent quarter. The company's EBITDA growth of 11.11% further supports Susquehanna's positive outlook on the company's operational efficiency.
Notably, TFI International has maintained dividend payments for 23 consecutive years and has raised its dividend for 3 consecutive years, as highlighted by InvestingPro Tips. This consistent dividend policy, coupled with a current dividend yield of 1.18%, underscores the company's commitment to shareholder returns, which may be attractive to income-focused investors.
The stock's one-year total return of 17.78% outperforms many peers in the transportation sector, reflecting market confidence in TFI International's business model and growth strategies. This performance is particularly impressive given the challenges faced by the industry and aligns with the InvestingPro Tip indicating a strong return over the last five years.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights, with 9 more tips available for TFI International on the platform.
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