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  5. TFII: How would you compare these 2 as buys and growth forward. [TFI International Inc.]
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Q: How would you compare these 2 as buys and growth forward.
Thanks again
Asked by eugene on July 20, 2023
5i Research Answer:

XPO is trading at 29x Forward P/E, reinvesting most of its cash flow back to grow the business. Therefore, it has done only minor share purchases recently. Growth in the next few years is expected to be around 4%-5%. Net debt/EBITDA is around 2.3x. 

TFII is trading at 17.7x Forward P/E; the company experienced explosive growth in 2021 and 2022.  Net debt/EBITDA is around 1.2x. Growth in the next few years is in line with XPO of around 5%. TFII is generating healthy free cash flow and that allows it to do buybacks aggressively.

We would side with TFII at this point, with cheaper valuation, more buybacks, less debt, and a similar growth profile.

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