Transportation - Trucking: LTL 1Q26 Wrap-Up: Strong April sets up solid 2Q margins; XPO/TFII top LTL picks

Research evidence excerpt

Transportation - Trucking: LTL 1Q26 Wrap-Up: Strong April sets up solid 2Q margins; XPO/TFII top LTL picks

Our $476 price objective is based on a 34.0x target multiple on our 2027 EPS estimate.

Our target multiple remains above its 20x-31x 5-year trading range, given its growth

prospects as it scales its network, and as it moves past trough earnings and pricing

concerns. Our target multiple is just above the top end given its strong service and

ability to win share, with significant operating leverage as it adds volumes.

Downside risks to our PO are weak freight demand and slow or negative industrial

production growth. Our price objective is also threatened by increasing competition,

which could limit Saia's ability to grow volume and increase market share, while also

negatively impacting freight rates and pressuring profit margins. The less-than-truckload

industry is competitive, with a large number of national and regional companies vying

for business.

Upside risks to our PO are stronger than expected pricing acceleration. A faster-than

anticipated recovery in macro demand could lead to more robust earnings given the high

operating leverage built into SAIA's operating model. The sudden exit of a peer operator

could potentially drive additional tightness in LTL capacity, leading to higher-than-

expected pricing

TFI International (TFII / YTFII)

Our US$161 price objective (C$221) is based on 31.5x our 2026E US$ EPS estimate,

above the top of its 10-year one-standard deviation trading range of 11x-17x, as

earnings move past trough and we see potential for strong cash generation,

idiosyncratic U.S. LTL operational improvement, and upside from supportive

specialty/flatbed rate dynamics.

Downside risks to our price objective are weaker-than-expected economic conditions