Is it a good company at a reasonable price? I think that at present this company is expensive. However, I still think it is a great company. However, it is best, for long term results to purchase companies at least at a reasonable price.
I own this stock of TFI International Inc (TSX-TFII, OTC-TFIFF). The company has a combination of lowish dividend yield and good growth. The current dividends are 1.05% with a 10 year median of 2.37%. the 5 year dividend growth is 13% per year and the last dividend increase was 17.4%
When I was updating my spreadsheet, I noticed that I have done very well with this stock. I have had it for almost 5 years now and I have made a total return of 41.86% per year with 39.53% from capital gains and 2.33% from dividends.
If you had invested in this company in December 1992, $1001.07 you would have bought 381 shares at $1.47 per share. In December 2021, after 30 years you would have received $12,604.57 in dividends. The stock would be worth $96,613.47. Your total return would have been $109,268.14.
If you had invested in this company in December 2011, $1010.10 you would have bought 78 shares at $12.95 per share. In December 2021, after 10 years you would have received $601.75 in dividends. The stock would be worth $11,065.86. Your total return would have been $11,667.61.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $1.47 | $1,001.07 | 381 | 30 | $12,654.67 | $96,613.47 | $109,268.14 |
| $12.95 | $1,010.10 | 78 | 10 | $601.75 | $11,065.86 | $11,667.61 |
The dividend yields are low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.05%. The 5, 10 and historical dividend yields are moderate (2% to 4%) ranges at 2.23%, 2.37% and 2.93%. The dividend growth over the past 5 years is moderate (8% to 14% ranges) at 11% per year. The last dividend increase was good (15% and over) at 17%.
Dividends are now paid in US$. This started in the middle of 2021. Note also that this company used to be an income trust. When they were forced to become a corporation, they cut the dividend around 75%. A couple of years later they started to increase the dividends again. The yield is low because the stock price is growing a lot faster than dividends.
The Dividend Payout Ratios (DPR) are good. Since the dividends were paid in CDN$ until 2021, I am using DPR in CDN$. The DPR for EPS for 2021 is 13% with 5 year coverage at 22%. The DPR for Cash Flow per Share for 2021 is $8% with 5 year coverage at 10%. The DPR for Free Cash Flow for 2021 is 15% with 5 year coverage at 21%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2021 is 0.12 and is good and low. The Liquidity Ratio is low at 0.83, but if you had in cash flow after dividends it is better at 1.37. The Debt Ratio is good at 1.63. The Leverage and Debt/Equity Ratios are fine at 2.59 and 1.59 respectively.
The Total Return per year is shown below for years of 5 to 31 to the end of 2021 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 11.36% | 33.91% | 32.32% | 1.59% |
| 2011 | 10 | 10.48% | 29.21% | 27.05% | 2.16% |
| 2006 | 15 | -1.65% | 19.52% | 16.98% | 2.54% |
| 2001 | 20 | 0.11% | 43.91% | 21.47% | 22.44% |
| 1996 | 25 | 40.75% | 24.68% | 16.08% | |
| 1991 | 30 | 20.09% | 16.45% | 3.63% | |
| 1986 | 35 | 19.59% | 16.23% | 3.36% |
The Total Return per year is shown below for years of 5 to 18 to the end of 2021 in US$. There is not as much data in US$ as in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 12.65% | 35.41% | 33.79% | 1.62% |
| 2011 | 10 | 8.07% | 26.12% | 24.15% | 1.97% |
| 2006 | 15 | -2.20% | 19.20% | 16.39% | 2.80% |
| 2003 | 18 | 1.28% | 22.52% | 16.30% | 6.22% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.89, 12.11 and 16.77. The corresponding 10 year ratios are 9.07, 12.12 and 17.31. The corresponding historical ratios are 8.45, 11.86 and 14.16. The current P/E Ratio is 16.64 based on a stock price of $130.89 and EPS estimate for $7.86. The current ratio is between the median and high median of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN
I get a Graham Price of $73.2. The 10 year low, median, and high median Price/Graham Price Ratios are 0.84, 1.17 and 1.47. The current P/GP Ratio is 1.78 based on a stock price of $130.89. The current ratio is above the 10 year median high ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 2.17. The current P/B Ratio is 4.30 based on Book Value of $2,220M, Book Value per Share of $23.90 and a stock price of $102.68. The current ratio is 97% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.97. The current P/CF Ratio is 8.43 based on Cash Flow per Share estimate for 2022 of 12.20, Cash Flow of $1,133M and a stock price of $102.68. The current ratio is 21% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
I get an historical median dividend yield of 2.92%. The current dividend yield is 1.05% based on dividends of $1.38 CDN$ ($1.08 US$) and a stock price of $130.89. The current dividend yield is 64% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$. You will get a similar result in US$.
I get a 10 year median dividend yield of 2.37%. The current dividend yield is 1.05% based on dividends of $1.38 CDN$ ($1.08 US$) and a stock price of $130.89. The current dividend yield is 56% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$. You will get a similar result in US$.
The 10 year median Price/Sales (Revenue) Ratio is 0.68. The current P/S Ratio is 1.12 based on Revenue estimate for 2022 of $8,527M, Revenue per Share of 491.79 and a stock price of $102.68. The current ration if 65% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably expensive. Both the dividend yield tests and the P/S Ratio test says this. All the other tests say this except for the P/E Ratio test.
When I look at analysts’ recommendations, I find Strong Buy (8), Buy (9) and Hold (3). The consensus would be a Strong Buy. The 12 months stock price is $118.94. This implies a total return of 16.88% with 15.83% from capital gains and 1.05% from dividends based on a current price of $130.89.
Most of the analysts on Stock Chase really like this company. Ambrose O'Callaghan on Motley Fool likes their fourth quarterly results and P/E Ratio. Christopher Liew on Motley Fool mentions their purchase of UPS. The company announces their fourth quarterly results on Globe Newswire. Simply Wall Street on Yahoo Finance discusses this stock. They list wo risks of a High Level of Debt and Large one-off items impacting financial results.
TFI International Inc is a transportation and logistics company domiciled in Canada. The company organizes itself into four segments: package and courier, less-than-truckload, truckload, and logistics. TFI International derives the majority of revenue domestically, followed by the United States. Its web site is here TFI International Inc.
The last stock I wrote about was about was Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more. The next stock I will write about will be IGM Financial Inc (TSX-IGM, OTC-IGIFF) ... learn more on Monday, March 7, 2022 around 5 pm.
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