Yahoo Finance At CA$44.78, Is It Time To Put TFI International Inc (TSE:TFII) On Your Watch List?
TFI International Inc (TSE:TFII), which is in the transportation business, and is based in Canada, received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$48.7 at one point, and dropping to the lows of CA$41.29. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether TFI International’s current trading price of CA$44.78 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at TFI International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for TFI International
Is TFI International still cheap?
According to my valuation model, TFI International seems to be fairly priced at around 17% below my intrinsic value, which means if you buy TFI International today, you’d be paying a fair price for it. And if you believe that the stock is really worth CA$54.06, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because TFI International’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will TFI International generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of TFI International, it is expected to deliver a negative earnings growth of -4.1%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? TFII seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on TFII for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on TFII should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on TFI International. You can find everything you need to know about TFI International in the latest infographic research report. If you are no longer interested in TFI International, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
