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On Thursday, BofA Securities made an adjustment to TFI International’s (NYSE:TFII) financial outlook, reducing the price target to $136.00 from the previous $145.00, while maintaining a Neutral rating on the stock. The stock, currently trading near its 52-week low of $124.36, has caught the attention of analysts, with InvestingPro data showing seven analysts recently revising their earnings estimates downward. Despite recent challenges, InvestingPro’s Fair Value analysis suggests the stock may be slightly undervalued at current levels. TFI International reported its fourth-quarter earnings for 2024, revealing an adjusted earnings per share (EPS) of $1.19, which was a 30% decrease from the previous year. This figure fell short of both BofA Securities’ projection of $1.53 and the consensus estimate of $1.58. The company maintains an overall "GOOD" financial health score according to InvestingPro analysis, with trailing twelve-month revenue reaching $8.4 billion and a gross profit margin of 15.4%.
The earnings miss was primarily attributed to the performance of TFI International’s Less-than-Truckload (LTL) segment, which accounts for 35% of the company’s revenue. Within this segment, the U.S. LTL operations, which represent 72% of the LTL revenue, were particularly weak, contributing to a $0.20 per share miss. The U.S. LTL adjusted operating ratio worsened to 97.3%, marking a significant year-over-year deterioration of 630 basis points and falling 510 basis points short of BofA’s target.
The analyst pointed out that the disappointing results underscore the company’s negative operating leverage stemming from persistent pricing pressure. TFI International had previously noted ongoing price competition in the lower end of the LTL segment. Furthermore, the company’s service levels are lagging behind those of its public peers, with its U.S. LTL claims ratio worsening to 0.9%, up from 0.8% in the third quarter of 2024. This is in contrast to Old Dominion Freight (NASDAQ:ODFL) Line’s (
Additionally, the Ground Freight Pricing (GFP) revenue, which is a legacy of TFI International’s acquisition of UPS Freight (now renamed TForce Freight), was reported at $34 million, a 58% decrease from the previous year and $19 million below BofA’s expectations. The Canadian LTL Operating Income also experienced a decline, falling 8% year-over-year to $26 million, which was $5 million below the anticipated figure, contributing to a $0.05 per share shortfall. Looking ahead, InvestingPro subscribers can access detailed analysis and forecasts, including the next earnings report scheduled for April 29, 2025. The platform offers comprehensive research reports covering 1,400+ US stocks, providing deeper insights into companies like TFI International.
In other recent news, TFI International Inc. announced a quarterly dividend increase to $0.45 per share, marking a 13% rise from the previous dividend of $0.40. This increase, payable on January 15, 2025, underscores the company’s commitment to enhancing shareholder returns and reflects confidence in its financial stability. Meanwhile, a report from Stifel analysts on the U.S. transport sector presents a cautious outlook for 2025, highlighting several risk factors such as persistent inflation, cautious consumer behavior, and geopolitical unrest. The report notes that the transport and logistics sector is entering the year with lower earnings expectations and emphasizes the importance of identifying companies with growth opportunities. Stifel’s analysis suggests that the current valuations of transport and logistics equities may not fully account for the unique demand risks associated with the current supply-driven recovery. The report advises investors to remain vigilant and seek out companies positioned to navigate this uncertain landscape effectively.
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