2021-2022

INVESETMENT
REPORT

TFII INTL
TFII.TO
PREPARED BY

MOHSIN DHRUBO

POWERED BY

www.economicscalgaryalbertacanada.ca
Phone: 587 703 7876
email: economics@economicscalgaryalbertacanada.ca
 PAGE 1

TFII.TO
COMPANY
SUMMARY
TFII.TO is a Canadian company
that is in the trucking industry,
subsector transportation. TFII
employs about 17,000
employees. It has a market cap
of 9.58 Billion.

The company has a yearly

dividend per share of 1.16. This
means if you own & hold 1 share
of the company, they will pay
you $1.16 each year.

The company has a beta of 1.46.

This means that the stock
moves more than the TSX itself.

RETURN ON ASSETS RETURN ON RETURN ON EQUITY

ROA Indicates how
profitable a company is
relative to its total assets.
This gives an idea as to how
efficient a company's
management is at using its
assets to generate earnings.
The 8 yr ave is 7.65%, 2020
was 2.33% due to Covid.
However it's debt structure
shows that this will recover
as things return to normal.
More on debt later.
INVESTMENTS
It is a management
performance measure
used to evaluate the
efficiency of an
investment or compare
the efficiency of a
number of different
investments.
10.22% over the last 8
years. So management
is handing the company
well.
Provides insight into how
efficiently a company (or
more specifically, its
management team) is
handling the money that
shareholders have
contributed to it.
In other words, it measures
the profitability of a
corporation in relation to
stockholders’ equity. The
higher the ROE, the more
efficient. 19.53% in 8 years is
very good.
 PAGE 2

EARNINGS PER
SHARE
EPS
Earnings per share (EPS)
measures how much of the
company's total earnings are
given to the shareholders.

So when you purchase a share

in a company EPS indicates
how much of their earnings
you will receive, and so then
you can take a look at the
price you pay for that one
share & see if that is a good fit
for you.

EPS TREND
EPS GROWTH
EPS graph 2010-2019 shows that
earnings for shareholders have
increased constantly from 2010, very
good sign.

EPS growth rate measures simply

how fast the EPS has been growing or
declining. So use EPS growth rate to
see whether the EPS is growing
faster or slowing down over the
years, if slowing down then it is of
concern.
Read this graph from right to left. Since we are concerned with
the historical data but we also want to see the most current
data it made sense to present the graphs this way. As we can
see the trend is increasing from 2011, means that the company
is making more money for the shareholders in each year from
2011.
 PAGE 3
Financial Ratios
PROFITABLE RATIO
These are profitability
ratios, these show you
how profitable the
company has been over
the years. The graph
shows the company's
ratios over the last 4
years to see how they
have performed, look for
positive slope trend lines
as they indicate improving
conditions.

LIQUIDITY RATIOS
A good liquidity ratio is anything
greater than 1. It indicates that
the company is in good financial
health and is less likely to face
financial hardships.

For current ratio look for above 1.

For quick ratio look for above 1.

When you see a current ratio

above 1 but quick ratio below 1, it
mean most of the company's asset
is just inventory in which case it
becomes important to see how
efficient the comany is in selling As we can see from this graph the current & quick ratios are
its assets, take a closer look at the downward sloping, this means the company is taking on more
asset turnover ratios. debt to run its operations. We will see if this is a concern when
combined later with other analysis.
Look for upward slope trendlines
for these ratios.
 PAGE 4

SOLVENCY RATIOS
These ratios determine how
well the company is in terms of
debt management. These ratios
provide an insight into the
company's financial health in
terms of debt, basically whether
the company is being run in
such a manner where the
investor's money is safe or not.
It gives an insight into how
likely the company is to be
bankrupt.

Debt-to-equity ratio should be

below 1, the higher this ratio is As we see from the graphs the debt-to-equity ratio
the more debt it has. The lower shows the level of debt taken by the company as
the ratio the more assets it has. mentioned previously however it is clear from the
interest cover ratio that the company has more than 6
The interest cover means the times its interest obligations. This means we shouldn't
higher this number the better. be too worried about high debt.
This ratio shows the ability of
the company to pay its debt
obligations using its operating
income.
 PAGE 5

STOCK EVALUATION
I have used a number of methods to calculate a fair value or intrinsic value of
the stock. The fair value or intrinsic value of the stock means what the actual
value of the stock should be, after finding this value I have compared it with
the market value of the stock, which determines if the stock is undervalued or
overvalued.

The stock market price of the company is the current price for each share of
the company. Whereas the intrinsic/fair value of the company represents what
we believe the share should be worth.

I have used a DCF method, dividend discount method, comparable analysis

method as well as taken the projected fair value provided by Simply Wall st,
Tip ranks, Desjardins and yahoo finance. Then I took an average of all the
values to reflect the true intrinsic/fair value of each share.

150 $139.45

$108.24 $108.00 $110.30 $113.97

$99.68
100
$73.45 $78.13

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 PAGE 6

INTRINSIC VALUE VS CURRENT VALUE

UPSIDE PERCENTAGE
Based on our calculations the true intrinsic/fair value of each share is
$103.90. The current price per share is $90.81, as of 2021-03-07.

This represents an upside of 14% from current prices. For example,

an investment of $1000 will result in 1140 when TFII reaches its
intrinsic value calculated here.

Note: while it may not seem like the return is eye catching, keep in
mind that it is rare to find a company as well balanced as TFII,
therefore this is definitely a long term invesment.

125

100
$103.90

75
$90.81

50

25

0
Current price Intrinsic Value
 PAGE 7

ECONOMIC VALUE ADDED

(EVA)
Economic value added (EVA), also known as economic profit, calculates the
true economic profit of a company. EVA is used to measure the value a
company generates from funds invested in it.

If a company's EVA is negative, it means the company is not generating value

from the funds invested into the business.

A positive EVA shows a company is producing value from the funds invested in
it.

As we see below TFII has been consistently EVA positive, which further
provides grounds for it to be a good investment opportunity,

TFII EVA 2017-2020

200M $189M

$164M
$147M $145M
150M

100M

50M

0M
2017 2018 2019 2020
 PAGE 8

RISK & SENSITIVITY

Below are the risk & sensitivity management of the investment in
TFII.TO.

Treynor ratio determines how much excess return was generated for
each unit of risk taken by an investor. So for each unit of risk taken
on TFII.TO was returned with a 1.203% return on the investment in
the last 5 years.

VaR @95%: TFII with a 5 year average monthly return of 3.0182%

means that with there is a 95% confidence level where the monthly
loss won’t be more than 17.98%.

VaR @99%: TFII with a 5 year average monthly return of 3.0182%

means that with there is a 99% confidence level where the monthly
loss won’t be more than 28.48%.
 PAGE 9

MARGIN OF SAFETY
Margin of safety measures the soundness of an investment. A high
margin of safety indicates a safer investment should the business
that is being invested in fails to deliver the investment is still safe
due to the high margin of safety determining an investment point
lower than the breakeven point.

To put it simply a margin of safety at 30% is encouraged normally,

which means that we find the breakeven point of the business. This is
the point where the revenue & the cost to generate that revenue is
the same for the business. We then invest when the prices are 30%
below that. This means that even if the business fails to generate 30%
of its sales, our investment is still safe.

Note: It may be a long & patient wait to purchase the share at this
margin of safety price. This is precisely why according to Qtrade
(online brokerage) has it's support at $43.44 & long term position at
$80.44. Whereas you can see from the data below that our 30% MOS
is $40.40.
 PAGE 10

TECHNICAL ANALYSIS
For technical analysis my favourite indicator to use is the RSI which
stands for Relative Strength Index. This measures whether the stock
has been overbought or oversold. The general rule of thumb is to buy
when RSI is below 30 or near 30 & sell when RSI is above 80 or near
80.

As we can see from below the RSI is around 50 which means that we
are perfectly neutral at the moment.

1 YEAR SCENARIO
Scenario: You purchase shares of TFII.TO worth $1000, and what
happens to your investment after 1 year?

If you purchase at the current price of $90.81 then you get 11 shares.
After 1 year you have $12.76 in dividends, and if the price reaches
the intrinsic value then you would have $1142.90 worth of shares.
Altogether after 1 year with dividends & price appreciation would
give you $1155.66 on your $1000 investment. Whereas if your
$1000 was sitting in your savings account it would give you about
$1000.92.