TSX:TFII - Post Discussion
Post by
retiredcf on Jul 14, 2022 8:00am
RBC 2
Connecting The Dots: TFII flash read-through – Cass releases June transportation index report
NYSE: TFII | USD 86.60 | Outperform | Price Target USD 100.00
Sentiment: Neutral
Volumes down -4% m/m on a seasonally adjusted basis - neutral to sentiment. Volume in June came in lower m/m and down -2% y/y. Looking ahead, inventory is becoming less of tailwind to freight demand with the April retail inventory/sales ratio (ex- autos) coming in at 1.15 from a low of 1.05 last September versus the 10-year average of 1.21. Our view is that higher interest rates will constrain goods purchases during the remainder of the year, potentially raising the inventory/sales ratio above its long- term average, and turning inventory into a freight headwind moving forward. Overall, while negative to the freight outlook, we view a weaker freight environment as largely priced into TFII shares at today's levels.
Inferred rates up +13% m/m on a seasonally adjusted basis, largely due to higher mix of truck freight - neutral to sentiment.
Freight rates came in higher m/m largely reflecting mix and therefore neutral to sentiment in our view. Key is that moving forward we expect pricing to be pressured as higher interest rates and recent trucking hiring gains decrease demand and increase supply, respectively. We believe however that a softening rate environment is baked into truck valuation and is therefore neutral on today's update.
What happened? Cass Information Systems, which provides freight audit and payment services, today released its June 2022 Transportation index. Key is that North American freight shipments were down -2% y/y and that North American inferred rates were up +28% y/y. North American June volumes were down -4% m/m on a seasonally adjusted basis. See Exhibit 1.
Be the first to comment on this post