Comparison Looking at EFN and TFII to deploy new money. EFN has done better the last 6 months and appears more expensive. RBC rates them both outperform. How comparable are their businesses and which one do you consider more attractive at present?
We would not consider the business that comparable, though each has cyclical qualities. TFII delivers goods for customers (trucking) and EFN leases out vehicles. Both are economically sensitive, but EFN offers long term leases and primarily profits from the spread (fees charged vs financing costs) and TFII profits from delivering goods at a lower cost to what it charges customers. EFN has done better recently, certainly, but TFII has a better long term record and is cheaper. Which one does better partially depends on interest rates and the economy. A recession could still hurt TFII. But, overall we would consider TFII much better. EFN has experienced some credit quality issues in the past and has cut its dividend (since recovered). TFII though has been a strong acquirer of companies and has been a very good compounder of capital. (5iResearch)