TFI International (TSX:TFII) stands out as one of the top-performing stocks on the TSX. This comes down mainly to its strategic acquisitions and robust growth prospects. Known for its significant presence in the transportation and logistics sector, TFI International has been growing through strategic acquisitions like UPS Freight. This has positioned the company for substantial earnings and revenue growth. Its dividend-growth streak adds to its attractiveness as an investment.

However, for investors looking to capitalize on TFI's potential, there is one critical aspect to watch. The companyâs margin improvement and integration of acquisitions. Today, thatâs exactly what weâre going to look at. So, letâs get right into it.

A growth engine

TFI Internationalâs acquisition strategy is a cornerstone of its business model. The company has a history of making strategic acquisitions to expand its footprint and enhance its capabilities. The acquisition of UPS Freight is a prime example. This move has significantly bolstered TFIâs presence in the U.S. market, shifting its revenue base more heavily toward the United States.

TFI International has also demonstrated resilience even during economic downturns. This resilience is a testament to its robust business model and operational efficiency. Despite potential recession fears, TFI remains well-positioned to weather economic challenges due to its diversified revenue streams and strategic acquisitions.

Looking forward, analysts project continued earnings growth for TFI, driven by higher freight volumes and improved operational efficiencies. The integration of new acquisitions and the ongoing improvement in profit margins are expected to further enhance TFI's financial performance.

Margin improvements

Alright, so letâs get into the improvements needed by TFI stock. When TFI International acquired UPS Freight, the business was operating at a breakeven point with margins of around 1%. TFI's management set an ambitious goal to improve these margins to 10%. Achieving such margin improvements is crucial for driving revenue and earnings growth.

In the most recent earnings report, TFI International showcased its ability to integrate acquisitions effectively and improve operational efficiencies. The company reported a notable increase in revenue and operating income, driven by both organic growth and the successful integration of acquired businesses.

For investors, monitoring TFIâs ability to achieve margin improvements and successfully integrate new acquisitions is crucial. These factors will significantly influence the company's profitability and long-term growth. The consistent dividend growth, backed by strong earnings and revenue growth, makes TFI an attractive investment. However, the real test lies in how well the company can continue to leverage its acquisitions for sustained financial performance.

Bottom line

Shares of TFI stock are now up by 40% in the last year, offering a 1.07% dividend yield. That might sound nice, but these improvements will have to continue to support the companyâs growth.

TFI International's strategic acquisitions and focus on margin improvement are key drivers of its success. Investors should closely watch how the company manages these aspects, particularly in the context of integrating new acquisitions and improving operational efficiencies. By keeping an eye on these critical factors, investors can make more informed decisions and potentially reap significant rewards from investing in TFI International.

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