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September 30, 2019

TFI International (TSX:TFII) Announces Renewal Of Share Buybacks

By Dan Kent

September 30, 2019

TFI International (TSX:TFII), in our opinion one of the best Canadian stocks to buy right now, saw a 2.74% increase in its stock price today, riding on news that the Toronto Stock Exchange had approved the renewal of the company’s normal course issuer bid. TFI International may now repurchase a maximum of 7,000,000 shares for cancellation.

The share buybacks represent around 9% of the companies total shares outstanding, and the company is allowed to begin purchasing shares on October 2nd. The deadline for repurchase ends October 1st, 2020.

The deal is very similar to the one the company had in place prior to this new deal, which allowed them to purchase up to 8.3 million common shares. Over the course of October 2nd 2018 up until now, TFI International repurchased a total of 6,990,000 common shares at an average price of $39.58 a share. The company decided to cancel all of the shares it had purchased.

Why is the company repurchasing shares?

It is well known that the transportation and logistics company is trading at a deep discount relative to its true value. Due to the stocks struggles, investors are left with a stock that provides an excellent dividend yield (2.43% at the time of writing) with an extremely low payout ratio of only 25%. To add to this, the company is only paying out 33% of its current free cash flows towards its dividend.

TFI is trading at under 10 times forward earnings, and with a 5 year PEG ratio of only 0.53, there is a lot more room to grow for this company than is reflected in its current share price.

Trade wars are wearing this transportation stock down, and as a result management has realized its share price is cheap, and has decided to renew its share buyback program. Over the short term, we can expect this to boost TFI’s price as investor confidence rises in the undervalued stock.

The company will strategically repurchase shares throughout the term of this agreement, and states that it is an appropriate use of the companies financial resources along with key acquisitions, and should do well do enhance shareholder value.

**Daniel Kent is long TFII.TO

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Dan Kent


An active dividend and growth investor, Dan has been involved with the website since its inception. Dan is primarily a researcher and writer here at Stocktrades.ca, and his pieces have numerous mentions on the Globe and Mail, Forbes, Winnipeg Free Press, and other high authority financial websites. He has become an authority figure in the Canadian finance niche, primarily due to his attention to detail and overall dedication to achieving the highest returns on his investments. Investing on his own since he was 19 years old, Dan has compiled the experience and knowledge needed to be successful in the world of self-directed investing, and is always happy to bring that knowledge to Stocktrades.ca readers and any other publications that give him the opportunity to write. Dan manages his TFSA, RRSPs and a LIRA at Questrade, and has compiled a real estate portfolio of his primary residence and 2 rental properties, all before his 30th birthday.

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