E-commerce And Green Tech Will Drive North American Logistics

Key Takeaways

• Leveraging AI, automation, and a brokerage-focused model strengthens margins, boosts earnings, and enables aggressive capital returns and major acquisitions.
  
• Scale, e-commerce growth, and sustainability initiatives position TFI as a preferred partner, supporting organic expansion, pricing power, and market share gains.
  
• Labor shortages, regulatory costs, acquisition risks, weak freight demand, and lagging technology investments threaten TFI's margins, competitive edge, and long-term profitability.

Catalysts

Provides transportation and logistics services in the United States, Mexico, and Canada.

• Analysts broadly agree that operational improvements and technology implementation can drive LTL margins to a sub-90 operating ratio, but management's focus on leveraging AI, further automation, and reducing missed pickups could allow operating ratios to outperform peers significantly sooner, supporting outsized net margin expansion and accelerating earnings growth as service levels approach best-in-class.
  
• While consensus expects free cash flow upside from lower capital expenditures, TFI's rapid shift towards a less asset-intensive, brokerage-heavy model-especially within the U.S. Truckload segment-could unlock sustained free cash flow of up to $1 billion in a more normalized environment, allowing for aggressive share buybacks and transformational M&A to drive both EPS and revenue far ahead of expectations.
  
• The accelerating growth of e-commerce and last-mile delivery creates a durable, multi-year uplift in demand that disproportionately benefits a scale leader like TFI International, with its integrated, North American footprint, enabling high single-digit organic revenue growth alongside pricing power as customers consolidate spending with reliable partners.
  
• Active investment in greener fleets and adoption of next-generation telematics positions TFI as a preferred partner for environmentally conscious shippers, setting the stage for market share gains and higher yield contracts, which can materially boost both revenue quality and net margins.
  
• The company's deep pipeline of acquisition targets, improving integration capabilities, and intentions to pursue a large-scale transformative deal in 2026 mean cross-segment synergies, broader geographic reach, and increased pricing power, all supporting a structural step-change in EBITDA and return on invested capital.

TFI International Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on TFI International compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming TFI International's revenue will grow by 4.0% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 4.5% today to 6.3% in 3 years time.
• The bullish analysts expect earnings to reach $589.1 million (and earnings per share of $8.21) by about August 2028, up from $368.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 20.5x on those 2028 earnings, up from 19.5x today. This future PE is greater than the current PE for the CA Transportation industry at 18.5x.
• Analysts expect the number of shares outstanding to decline by 1.87% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.84%, as per the Simply Wall St company report.

TFI International Future Earnings Per Share Growth

Risks

• Ongoing demographic labor shortages and rising wage pressures in North American trucking could limit TFI's capacity to serve customers efficiently, raising operating costs and constraining long-term profitability, resulting in margin pressures.
  
• Aggressive acquisition and integration strategies, like the recent Daseke purchase, carry the risk of operational disruptions or failure to realize expected synergies, leading to potential margin contraction and lower net earnings over time.
  
• Underlying weakness in North American industrial and logistics freight demand due to persistent economic softness or further supply chain reshoring can cap revenue growth and expose TFI to regional economic volatility in the future.
  
• Delays or underinvestment in digital technology and fleet modernization relative to competitors, especially in areas like automation or AI, may result in cost disadvantages, lost business from shippers seeking high-tech integration, and ongoing erosion of revenue and operating margins.
  
• Increasing environmental regulations and stricter ESG mandates could require costly upgrades to equipment and processes, increasing fixed operating expenses and compressing net margins for asset-heavy operators like TFI International.

Valuation

• The assumed bullish price target for TFI International is CA$169.69, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of TFI International's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$169.69, and the most bearish reporting a price target of just CA$96.39.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $9.3 billion, earnings will come to $589.1 million, and it would be trading on a PE ratio of 20.5x, assuming you use a discount rate of 7.8%.
• Given the current share price of CA$119.03, the bullish analyst price target of CA$169.69 is 29.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.