Robinhood shares gain on Q2 beat, as user and crypto growth accelerate
On Tuesday, TD Securities began coverage of Transcontinental Inc (TSX:TCLa). (TCL/A:CN) (OTC: TCLAF), issuing a Buy rating and setting a price target of Cdn$23.00.
TD Securities analysts cited the company's potential to narrow the valuation gap with its competitors as a key reason for the positive outlook.
The growth initiatives underway at Transcontinental are expected to increase earnings per share (EPS) and free cash flow (FCF) per share.
The analysts noted, "the company has pivoted towards growth in business lines with structural demand tailwinds (e.g., flexible packaging, in-store marketing, and retail services) to mitigate top-line erosion for legacy printing and publishing business units."
The analysts highlighted Transcontinental's impressive track record of free cash flow yield, averaging 15.6% annually over the last 11 years.
Looking forward, TD Securities projects an average FCF yield of 16.2% for fiscal years 2025 and 2026. This forecast stands significantly above the estimated 7.7% FCF yield for the company's peer group.
Transcontinental's financial flexibility was also noted as a strength, with the company's balance sheet considered well-positioned to support both strategic bolt-on acquisitions and enhanced returns to shareholders.
The latter includes potential share buybacks and an increase in the regular dividend, as per the analysts' observations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.