Is it a good company at a reasonable price? I do like this company which I have done very well with. I bought it for diversification for investments sectors and dividends. The dividends are low with moderate increases. The last two dividend increases were good (above 14%) at 17.39% for 2022 and 29.63% for 2023.
I own this stock of TFI International Inc (TSX-TFII, OTC-TFIFF). I bought this for diversification. I like to have stocks that have good dividend and low growth and others, like this stock, with low dividends, but good growth. I will continue to keep my stock, but I will not be buying more because I have enough of this stock in my portfolio.
When I was updating my spreadsheet, I noticed I have done very well by this stock. I have had it for 5.7 years and made several purchases. My Total Return if 38.03% with 35.84% from capital gains and 2.19% from dividends.
If you had invested in this company in December 1993, for $1,000.33 you would have bought 599 shares at $1.67 per share. In December 2022, after 30 years you would have received $12,007.10 in dividends. The stock would be worth $81,230.39. Your total return would have been $93,237.49.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $1.67 | $1,000.33 | 599 | 30 | $12,007.10 | $81,230.39 | $93,237.49 |
If you had invested in this company in December 2012, for $1,012.86 you would have bought 51 shares at $19.86 per share. In December 2022, after 10 years you would have received $443.06 in dividends. The stock would be worth $6,916.11. Your total return would have been $7,359.17.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $19.86 | $1,012.86 | 51 | 10 | $443.06 | $6,916.11 | $7,359.17 |
The dividend yields are low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.12%. The 5, 10 and historical dividend yields are moderate (2% to 4%) at 2.15%, 2.27% and 2.75%. The dividend increases are moderate (8% to 14% ranges)with dividends increasing by 12.3% per year over the past 5 years. The last dividend increase was for 29.6% and it was for 2023.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2022 is 12% and the 5 year coverage is 17%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 13.5% with 5 year coverage at 20.8%. The DPR for Cash Flow per Share for 2022 is 7% with 5 year coverage at 9%. The DPR for Free Cash Flow (FCF) for 2022 is 16% with 5 year coverage at 18%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is low and good at 0.15. The Liquidity Ratio for 2022 is a bit low at 1.31 and prefer this to be 1.50 or higher. If you add in Cash Flow after dividends it is 2.22. The Debt ratio for 2022 is good at 1.81. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.24 and 1.24.
The Total Return per year is shown below for years of 5 to 32 to the end of 2022 in CDN$. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 13.99% | 34.69% | 32.78% | 1.91% |
| 2012 | 10 | 11.56% | 23.01% | 21.18% | 1.83% |
| 2007 | 15 | -0.49% | 22.30% | 19.61% | 2.68% |
| 2002 | 20 | 1.25% | 22.16% | 15.50% | 6.67% |
| 1997 | 25 | 33.30% | 20.62% | 12.68% | |
| 1992 | 30 | 19.93% | 15.79% | 4.14% | |
| 1990 | 32 | 19.14% | 15.52% | 3.61% |
The Total Return per year is shown below for years of 5 to 19 to the end of 2022 in US$. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 12.26% | 34.07% | 32.14% | 1.93% |
| 2012 | 10 | 8.17% | 19.12% | 17.49% | 1.63% |
| 2007 | 15 | -2.56% | 19.74% | 17.21% | 2.53% |
| 2003 | 19 | 2.04% | 21.06% | 14.70% | 6.36% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.76, 12.07 and 15.04. The corresponding 10 year ratios are 9.07, 12.12 and 17.31. The corresponding historical ratios are 8.06, 11.66 and 12.47. The current P/E Ratio is 17.15 based on a stock price of $169.44 and an EPS estimate for 2023 of $9.88 ($7.26 US$). This P/E Ratio is between the median and high ratios 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 also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 9.10, 114.46 and 13.92. The corresponding 10 year ratios are 9.52, 13.70 and 16.93. The current P/AEPS Ratio is 16.48 based on a stock price of $124.60 and AEPS estimate for 2023 of $7.56. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. You will get similar results in CDN$.
I get a Graham Price of $94.71. The 10-year low, median, and high median Price/Graham Price Ratios are 0.97, 1.20 and 1.47. The current P/GP Ratio is 1.79 based on a stock price of $124.60. This current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 2.44. The current P/B Ratio is 4.38 based on a stock price of $124.60, Book Value of $2,463M and Book Value per Share of $28.46. The current ratio is 79% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
I also have a Book Value per Share estimate for 2023 of $31.00. This implies a ratio of 4.02 with Book Value of $2,683M and a stock price of $124.60. This ratio is 65% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 7.78. The current P/CF Ratio is 11.03 based on a stock price of $124.60, Cash Flow per Share estimate for 2023 of $11.30 and Cash Flow of $977.9M. The current ratio is 42% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
I get an historical median dividend yield of 2.76%. The current dividend yield is 1.12% based on dividends of $1.40 and a stock price of $124.60. The current dividend yield is 59% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
I get an historical median dividend yield of 2.31%. The current dividend yield is 1.12% based on dividends of $1.40 and a stock price of $124.60. The current dividend yield is 51% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 0.69. The current P/S Ratio is 1.28 based on Revenue estimate for 2023 of $8,400M, Revenue per Share of $97.07, and a stock price of $124.60. The current ratio is 86% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get similar results in CDN$.
Results of stock price testing is that the stock price is probably relatively expensive. Both the dividend yield tests are saying the stock price is relatively expensive and it is confirmed by the P/S Ratio test. Most of the other testing is also saying the same thing.
I can look at the capital gains and total return over several years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the beginning P/E Ratios for good returns are about the same today. The P/S Ratio looks high compared to the past. The dividend yield looks low. However, this company used to be an income trust with very high dividends.
In the following chart the capital gains for the 15 years to December 31, 2022 is 19.61% per year, the starting P/E Ratio (the one from 15 years ago) was 17.77, P/S Ratio was 0.41 and yield was 17.05%. Does this chart change my opinion of the stock price? No and this is because of the P/S Ratios.
| Years | Cap Gains | Tot. Ret. | Beg P/E | Beg P/S | Beg Yield |
|---|---|---|---|---|---|
| 5 | 32.78% | 34.69% | 19.33 | 0.62 | 2.31% |
| 10 | 21.18% | 23.01% | 12.81 | 0.59 | 2.47% |
| 15 | 19.61% | 22.30% | 17.77 | 0.41 | 17.05% |
| 20 | 15.50% | 22.16% | 18.54 | 0.85 | 11.94% |
| 25 | 20.62% | 33.30% | -5.00 | 0.14 | 1.22% |
| 30 | 15.79% | 19.93% | |||
| 32 | 15.52% | 19.14% | |||
| current | 17.15 | 1.28 | 1.12% |
When I look at analysts’ recommendations, I find Strong Buy (8), Buy (8) and Hold (5). The consensus recommendation is a Buy. The 12 month stock price is $157.56 ($123.10 US$). This implies a total return of 0.02% with a capital loss of 1.11% and dividends of $1.12% based on a current stock price of $169.44. This 12 month total return does not seem to go with the buying recommendations.
Note that the 12 month high price is $196.10 ($144.00 US$). This implies a total return of 16.81% with 15.68% from capital gains and 1.12% from dividends based on a current stock price of $169.44. The 12 month low stock price is $131.67 ($96.73 US$). This implies a total return loss of 21.17% with a 22.29% capital loss and 1.12% from dividends based on a current stock price of $169.44.
This stock is well thought of by analysts on Stock Chase. Stock Chase gives this stock 5 stars out of 5. It is number 83 on Money Sense list. Amy Legate-Wolfe on Motley Fool thinks this is a growth stock to buy. Adam Othman on Motley Fool says this stock is an industrial leader to be held in your RRSP. The company put out a press release on Newswire about their 2022 year end results.
Simply Wall Street on Yahoo Finance thinks it is a good idea to invest in profitable companies like TFI. Simply Wall Street has 4 warnings for this stock of earnings are forecast to decline by an average of 8.9% per year for the next 3 years; has a high level of debt; large one-off items impacting financial results; and significant insider selling over the past 3 months. The company publishes Adjusted Earnings per Share (AEPS) to exclude such things as one -off financial items. AEPS is expected to increase over the next three years. Insiders not taking up options shows as selling, but over the past year, the CEO, CFO and Lead Director all increased the number of shares they have.
TFI International Inc. is in the transportation and logistics industry. The Company identifies strategic acquisitions and manages a network of subsidiaries. It operates principally in the United States, Canada, and Mexico. TFI International Inc. is based in St Laurent, Canada. 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 6, 2023 around 5 pm.
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