TFI International delivered one of the cleaner turnarounds in freight last quarter, and the market has spent the months since acting as if it never happened. Adjusted earnings of $1.85 a share blew past management's $1.50 to $1.60 guide, consolidated operating margin roughly doubled from the first quarter to 11.6%, and the truckload unit posted a 660 basis point swing in its operating ratio in a single quarter. Yet the stock has fallen about 20% since that report, trailing the S&P 500 by nearly 25 percentage points. The third-quarter release after the close on October 29 will show whether that selloff was a sensible discount for a fragile recovery or an overreaction to a story that is still working.
The Street is looking for $1.75 a share on revenue of $2.21 billion. That would be up about 46% from $1.20 a year ago on revenue growth of roughly 12%, a profile that says operating leverage, not volume alone, is doing the heavy lifting. Notably, consensus sits a bit below the second quarter's $1.85, which leaves some room for seasonality, the deliberate shedding of LTL freight and a weaker Canadian dollar. TFI has not restored full-year guidance, citing trade uncertainty, so the most useful yardsticks are the segment targets management laid out: a 500 to 600 basis point year-over-year improvement in the truckload operating ratio, 250 to 350 basis points of margin improvement in logistics, and a roughly flat LTL operating ratio near 88.8%.
Truckload is the heart of the bull case. Revenue per truck per week accelerated through the second quarter, from about 11% growth in April to over 14% in June, and was holding near 14.5% into July. Management framed the tightening as supply-driven and more durable than past cycles, pointing to US enforcement on commercial licenses, English proficiency and unsafe drivers, plus a new Canadian reporting rule aimed at low-cost driver arrangements. If those yield measures held through September and the operating ratio lands inside the promised improvement band, the argument that this is structural rather than a brief spike gets considerably stronger. Lower depreciation from right-sizing the old fleet and brokerage growth north of 30% should also persist. A fade in rate per truck back toward single digits would undercut the thesis faster than anything else.
Logistics carries its own test. Management expected the truck-moving business to turn positive in the second half as OEM volumes improve, reversing last year's weakness. Margin holding near the second quarter's 11.5% would suggest that inflection is real.
US LTL remains the problem child, though management cast it as self-inflicted. The company admitted it had underpriced 3PL blanket freight, which lifted shipments 7.5% while revenue per shipment ex-fuel fell 2% and surge costs piled up. The fix is repricing, which means fewer shipments in the near term. Falling tonnage should not alarm anyone if yield turns positive and overtime and third-party carrier costs recede. Falling volume without a pricing payoff would be a genuine warning. Investors should also confirm that the $10.5 million accident reserve charge truly was a one-off and that leverage keeps moving from 2.4x toward the roughly 2.0x targeted for year-end.
Sentiment has cooled sharply, with bullish readings falling from 38% before the last report to about 10.5% now. The stock trades at $112.63, well below its 200-day average near $129 and just above the $110.32 low of its post-earnings range, a far cry from the $157 high. That bar is not demanding, but a stock sitting near its lows needs evidence, not promises. The deciding question is whether truckload pricing held its momentum through the quarter. If it did, and LTL repricing shows early traction, the second quarter looks like the start of a cycle. If not, the market's skepticism will look justified.