Last Week On Friday FDX announce it was having a distressed quarter going forward with earnings down potentially as much as 50%. The CEO even suggested he feels there will be a worldwide recession. If what he is saying is true and a real threat going forward, is TFII facing the same issues and what is their outlook?
The possibility of a recession is hardly 'news'. Europe is almost guaranteed to have one and North America likely as well. General business can suffer, and TFII won't be immune. The questions are (1) does it happen?, (2) how bad will it be? (3) is it priced in? (4) How long will it last? (5) What's the upside potential when it is over? TFII is priced at 11X earnings. EPS is expected to be flat in 2023, so analysts are already expecting some slowdown in growth. Most analysts forecast a possible 15% drop in aggregate corporate earnings in a recession. Economically sensititive stocks may see worse. None of this worries us that much. First, valuations are low. Second, analysts are often wrong. TFII did fine in the recession of 2008 and while it did slow down in 2009, it was still very profitable ($26M) for that year, and then nearly tripled profits in 2010 coming out of the recession. (5iResearch)