Key Takeaways
- TFI International fell 15% after a third-quarter earnings miss and fourth-quarter guidance well below estimates.
- Truckload operating income nearly doubled, but LTL operating income fell 43%.
- FedEx Freight and XPO both improved their adjusted LTL margins, so TFI’s LTL slide looks like its own problem.
- TFI’s Truckload rebound matches Knight-Swift’s, but LTL pricing is the thing to watch.
TFI International (TFII) sank 15% today (trading at about $96) after its third-quarter report missed on earnings, fell short of its own guidance and guided well below Wall Street.
The biggest LTL rivals are fine. FedEx Freight (FDXF) and XPO (XPO) both reported better adjusted LTL margins Thursday, while TFI’s shrank. TFI’s Truckload rebound also matches the one Knight-Swift (KNX) reported last week, so that half of the business isn’t the issue.
What Exactly Happened
Adjusted EPS rose 39% to $1.67. That was short of the roughly $1.75 consensus and below the $1.70-$1.80 TFI guided to in July. The segments split:
- Truckload operating income: $100.2 million, up 91%
- LTL operating income: $44.4 million, down 43%, with its operating margin falling from 11.3% to 6.6%
The outlook is the bigger problem. TFI guided fourth-quarter adjusted EPS to $1.30-$1.40, against the roughly $1.67 analysts expected. That’s still up from $1.09 a year ago, but the midpoint sits about 19% below the Street.
LTL Is Still Heading the Wrong Way
TFI’s LTL unit moved 4.6% more shipments, but revenue per shipment excluding fuel fell 4.4%, and its adjusted operating ratio worsened to 91.3% from 88.8%. A $14.4 million office writedown also hit operating income, but strip it out and LTL profit still fell about 24%.
CEO Alain Bédard said LTL pricing “began to benefit results late in the quarter and into October.” But management still expects the LTL adjusted operating ratio to come in flat to 100 basis points worse year over year this quarter. And after the quarter ended, TFI learned that an LTL contract worth $30.4 million of quarterly revenue (about 4.5% of the segment’s sales) won’t be renewed past Jan. 31, 2027.
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Rivals Are Getting Paid
XPO’s LTL adjusted operating ratio improved 260 basis points to 80.1%. Revenue per shipment excluding fuel rose 2.6% and shipments per day rose 5.8%, so it got more freight at better prices.
FedEx Freight’s revenue per shipment excluding fuel rose 1.6% over the four months to Sept. 30, and its adjusted operating margin widened to 15.5%. It raised its adjusted operating income outlook to $695-$715 million, though it credited fuel and slightly higher volumes more than price. The stock is up around 15% today.
TFI added lighter shipments and still lost ground on price (revenue per hundredweight excluding fuel slipped 0.9%), and its margin paid for it.
Truckload looks like a rebound across the market. Knight-Swift’s truckload adjusted operating ratio improved 700 basis points to 89.2%, close to TFI’s move from 92.3% to 86.7%. Knight-Swift CEO Adam Miller expects cost inflation and tight capacity to require “further meaningful rate growth in 2027.”
The Reset Is in the Estimates
Going into the report, analysts expected TFI’s earnings to keep climbing:
Add the guide to the $4.21 TFI earned through September, and 2026 lands at $5.51-$5.61, below the roughly $6 analysts expected, so those estimates should come down.
And here’s what investors paid for those earnings before today’s drop:
What TFI Has to Prove in LTL
Truckload is doing its part, so TFI stock now hangs on whether LTL pricing can lift the segment’s margins, and the company’s own guide has those margins no better this quarter. I’d want a quarter of rising LTL revenue per hundredweight before calling a 15% drop a buying chance. If the October pricing gains Bédard flagged hold, that guide could prove conservative, and the fourth-quarter LTL operating ratio is the number that settles it.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
