TransForce Inc., North America’s largest mover of oil and gas-drilling rigs, jumped the most in six months in Toronto after posting profit that beat analysts’ estimates and signaling it may acquire a U.S. company.
The provider of transportation and logistics services will close the C$25 million ($24.9 million) to C$35 million deal, with a cash flow of about C$6 million, by Aug. 31, Chief Executive Officer Alain Bedard said in a conference call today. Bedard did not identify the company.
TransForce, based in St. Laurent, Quebec, rose 6.3 percent to C$17.63, its biggest rise since May, 2011, and is up 36 percent this year.
“TransForce is very much an M&A and execution story,” said Maxim Sytchev, an analyst at AltaCorp Capital Inc. by telephone. “They aren’t shy about buying assets that have been underperforming.” Sytchev, based in Toronto, rates the stock sector perform.
Since organic growth opportunities remain stale, the company “intends to maintain its disciplined acquisition strategy” to drive revenue growth, said Benoit Poirier, an analyst at Desjardins Securities Inc. in a note.
Second-quarter profit rose 30 percent to C$34.1 million from a year earlier while earnings per share rose to 34 cents from 27 cents a share. Adjusted earnings of 38 cents beat analysts estimates of 37 cents. Sales jumped 25 percent to C$812 million from last year.
“Last year, they did a significant number of acquisitions,” said Jason Granger, an analyst at BMO Capital Markets, in a phone interview from Toronto. “This year, they’ve noted their focus is more on integrating those acquisitions and improving operations.”
Granger, who rates the stock outperform, said the company’s shift to services from trucking is paying off.
“What they’re doing is executing a strategic repositioning where they are shifting their business mix from trucking to service lines with more defensible characteristics like courier, oilfield and waste management,” said Granger. “As they start to execute that shift, I think the market gives them credit for it.”