Should You Rethink TFI International After Five Years of 95% Growth and Recent Acquisitions?
Wondering if TFI International is a hidden deal or if the stock’s recent price puts it firmly in the “overvalued” camp? Let’s take a closer look at what might really be driving the numbers behind the share price.
While the stock dropped 2.1% over the last month, it remains up 95.4% over five years. This suggests both risk and opportunity may be present depending on your time horizon.
Recent headlines have highlighted TFI’s ongoing efforts to streamline operations and expand through targeted acquisitions. This has fueled conversation about its long-term growth strategy. The combination of strategic moves and sector news has added new momentum to the debate on the company’s market positioning.
According to Simply Wall St’s valuation checks, TFI International earns a score of 4 out of 6 for undervaluation, indicating there is more to consider than just headline numbers. Various ways to value the stock will be explored next, with an even better approach to understanding what TFI might really be worth discussed at the end.
The Discounted Cash Flow (DCF) model is a widely recognized method for estimating a company’s intrinsic value. It works by taking the company’s projected future cash flows and discounting them back to today’s dollars. This gives investors a sense of what the business is actually worth right now based on future expectations.
For TFI International, the latest-12-month free cash flow stands at $594.87 million. Analyst estimates project free cash flow to grow steadily over the next several years, reaching about $929 million by 2029. After the five-year analyst window, further growth is extrapolated, providing a ten-year outlook on the company’s ability to generate cash.
After factoring in all projected and discounted free cash flows, the DCF model arrives at an estimated intrinsic value of $298.23 per share. With the current share price trading at a 59.1% discount to this value, the model suggests TFI International may be significantly undervalued by the market at this time.
The Price-to-Earnings (PE) ratio is a widely used tool for assessing the valuation of established, profitable companies like TFI International. Because it links the current share price with the company’s actual earnings, it helps investors measure how much they are paying for each dollar of profit.
Growth prospects and risk level both influence what a “normal” PE ratio should be. Fast-growing firms or those in booming sectors can often command a higher PE, while those facing challenges typically trade at lower multiples. Risk factors, industry trends, and profit stability all play a part in setting investor expectations for a reasonable PE range.
At present, TFI International trades at a PE ratio of 21.95x. This is above the transportation industry’s average of 14.98x, but below the average among its direct peers, which sits at 28.36x.
Rather than rely solely on peer or industry comparisons, Simply Wall St offers a proprietary “Fair Ratio” model. This metric goes further by considering factors like TFI’s earnings growth forecasts, profit margins, industry dynamics, market capitalization, and specific risks. The Fair Ratio for TFI International is 16.32x, reflecting a benchmark tailored to the company’s unique profile.
This more comprehensive approach shows TFI’s current PE is moderately above its Fair Ratio. In summary, the shares appear somewhat overvalued based on earnings and business fundamentals, even though they are less expensive than many peers.
Earlier we mentioned that there is an even better way to understand valuation. Let’s introduce you to Narratives. A Narrative is a simple, yet powerful description of the story you believe in for a company. It connects your opinions about its future—such as revenue, margins, and risks—directly to a financial forecast and resulting fair value.
Narratives bridge the gap between what you think is possible for a business and the numbers that show what it might be worth. This approach allows you to incorporate everything from management’s strategy to macroeconomic shifts into your investment decision. On Simply Wall St’s Community page, millions of investors are already using Narratives to chart out their personal outlook for TFI International, whether they are optimistic about North American freight expansion or cautious about prolonged weak demand and cost pressures.
With Narratives, it becomes much easier to spot when a stock’s Fair Value diverges from its current Price and decide whether it is time to buy, hold, or sell. In addition, Narratives update automatically as soon as new earnings or news are released, keeping your investment story current.
For example, some investors’ Narratives for TFI International reflect optimistic projections with fair values as high as CA$170.17, while others see more risk ahead and estimate values as low as CA$96.67. This range shows just how flexible and personalized this framework can be.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include TFII.TO.
