2024-02-13 20:44:34
Analyst Cameron Doerksen’s optimism for TFI International is moderate, since its current valuation reflects future revenue increases and better margins. Furthermore, growth for the next two quarters looks rather modest. (Photo: 123RF)
What to do with the titles of TFI International, Canadian Tire and Bausch Health? Here are some analyst recommendations likely to move prices soon. Note: the author may have a completely different opinion than that expressed by the analysts.
TFI International (TFII, $187.96): cautious optimism
On February 8, 2024, TFI International revealed results slightly higher than the forecasts of Cameron Doerksen of National Bank Financial, who welcomed them by increasing his target price.
During the financial year ended December 31, 2023, the company certainly generated revenues slightly below analyst expectations, at $1,969 million rather than $2,025 million, but its earnings before interest, tax and adjusted depreciation was $321M. National Bank Financial was instead counting on $317M.
Its earnings per share reached $1.71, which was slightly below the analyst’s $1.73.
The operating expenses of its less-than-truckload transportation service corresponded to 91% of its revenues, while they were around 90.8% in the previous quarter. At this time last year, while the delivery volume had slipped by 4.5%, this ratio stood at 90.4%.
In 2024, management would like to keep it around 88%, and increase it to a range of 80% to 85% in the longer term by gaining efficiency and reducing costs, recalls the analyst.
However, management was careful not to share its targets for the next financial year, not only because of the imminent acquisition of Daseke – the analyst is banking on the second quarter – but also the short-term macroeconomic context. It prefers to wait until after the unveiling of its results in the first quarter of the financial year to make a decision.
Convinced that the risk that the operation does not succeed is low, the analyst will take into account the contribution of Daseke to its quarterly results from the third quarter of 2024. However, we will have to wait until 2025 before really observing an improvement of the company’s bottom line, he believes.
In addition to better representing this acquisition in his future results, the analyst revises his evaluation of the sum of its parts in order to be more in tune with what is observed among his peers. Thus, its evaluation multiple of the value of the company in relation to its EBITDA increases from 9x to 10x for the transport of less-than-truckloads, while that for its transport of full loads climbs from 6x to 7x.
His optimism is moderate, since its current valuation well reflects the revenue increases and better margins to come. Furthermore, growth for the next two quarters looks rather modest.
Thus, Cameron Doerksen increases his target price from $183 to $209.
Canadian Tire (CTC.A, $170): “patience,” recommends an analyst
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