Q: How do this companies forward PE and cash flow multiples compare to those of its 2 closest US competitor and compared to its own historical #'s. Has it made progress on its profitability and ROIC measures which as you have said the company uses to measure its own performance. Would you buy it now with the thought that the freight recession is largely over, and the metrics previously mentioned are attractive, or would you wait until after January 20th when we find out more about tariffs and how that will impact TFI?
5i Research Answer:
TFII's current forward P/E is at 15.5 and over the last 10 years it has traded in the 14X to 15X range so we think the valuation looks fine at these levels. Peers such as ODFL and JBHT have traded in the 18X to 20X range while KNX trades at somehting closer to 14X (although the valuation here really can swing). Overall, we think the valuation for TFII looks fine and is at worst in-line with peers. ROIC is in the 10% to 15% range currently which is likely a more normalized level for the company and still impressive. We are not sure there will be a quick resolution to the tariff discussion, so waiting for some sort of 'event' here could take a lot of time. We would be fine with adding/averaging into a name like TFII.