Looking at the valuations in some of these transposition names I had to do a deep dive as I am a sucker for a turnaround story and that 5.5M+ in logistics revenue up 80% YoY if you rollout that figure for the entire Q spiked my interest as I had forgot about this name.
 
3 years after going public they have finally figured out their business model right as everyone has given up on the name, great setup. Love this orphan stock story. Let’s Dig In;
 
Industry Trends

TTR was talking about pricing improvements and volume growth in Q3 and it clearly continued into Q4 and into the new year given the press release this week with a blowout January Logistics revenue guidance.

Confirmation of industry strength with larger player Mullen group also putting up record trucking and logistics revenue up 19.4% and 11.0% organically in Q4 this week.

Fuel Surcharge revenue accelerating from increasing fuel pricing.

Strong volume growth from GDP growth accelerating on both sides of the border

Cited in Q3 MD&A cross-border improvement with ELD mandate (TRAK.V big winner from ELD!!!)
 
2018 Outlook from TTR

Guided to 140M in Run Rate Revenue w 15M in EBITDA when Q3 was reported.  Given that the Logistics division is the more profitable division and it just put up YoY growth in January of essentially 80% growth both those numbers could be real conservative.

As they begin to see volume growth alongside pricing improvements if I model out 5% growth in Transport and 50% in Logistics I get to 155M in revenue and I use a 11% EBITDA margin I get 17M in EBITDA. I believe there is still upside to these numbers as they still have room on their credit facility to continue to pursue acquisitions.

NAFTA and cross border auto industry not a big risk as automotive industry only makes up 3.2% of Q3 revenue.

With net debt of 48M on that 17M in EBITDA the net debt/EBITDA is well in control at 2.8x, with a blended interest rate of <5% the debt service costs are well under control. 

The fact that it trades below Book Value (1.02/share) is beyond me when the have been profitable every Q this year.
 
So you are looking at TTR trading today at <2.0x EBITDA!!!
 
 
Valuation

If you look at other truckers like TFII or MTL you get to a peer group valuation of 8.0 – 10.0x EV/EBITDA. That valuation range translates into a target price for TTR accounting for debt of 2.35 – 3.25/share or 2.80/share at the midpoint or over 200% upside if they execute an hit my 17M 2018 EBITDA number.
 
To be honest I think they could be a takeout candidate after hearing from MTL this week talk about continued tuck in acquisitions. Given MTL trades at 10.0x EV/EBIDTA they could take out TTR for a significant premium and still have it be accretive.
 
Trading at under 1.00/share it’s a steal but problem is finding any willing sellers to get in. One day this name is going to pop huge 20-30% on no news as someone says its time to get in.
 
ON THE RADAR