Titanium Transport Group is undervalued, Paradigm says

Its dividend is no more, but Paradigm Capital analyst Alexandra Ricci thinks there are still plenty of reasons to like Titanium Transport Group (Titanium Transport Group Stock Quote, Chart, News, Analysts, Financials TSX:TTNM).

On February 7, TTNM announced that, owing to “continuing market challenges” it would suspend its dividend.

“Given the current softness in our core markets and growing uncertainty surrounding potential tariff changes, we are adopting a pro-active and disciplined approach to capital allocation,” CEO Ted Daniel said. “While we are seeing some early signs of economic stabilization, the overall outlook remains uncertain due to the ongoing macroeconomic and geopolitical situation, including potential trade barriers and tariffs. By temporarily suspending our dividend, we are ensuring that we have the financial resilience to navigate near-term headwinds, accelerate debt-reduction and fortify our balance sheet for long-term sustainable growth.”

In a report to clients February 10, Ricci gave her take on the development.

“TTNM announced the suspension of its dividend on Friday, which comes in the wake of near-term tariff uncertainty and market softness,” she wrote. “The current dividend paid is ~$3.6M annually; capital will be reallocated to supporting debt repayment. Although the headline news is negative, our view is that TTNM is not a yield stock (yield ~3.9%) and we prefer the focus on debt repayment. Over the last four quarters, TTNM has paid down ~$35M of debt; at Q3/24 total debt was ~$170M. In 2025, we estimate the company can generate ~$35M of operating cash flow which will nearly all go to debt repayment. Based on our estimates, leverage at 2025 YE is ~2.7x (from ~4x 2024 YE).”

Ricci spoke briefly about the company’s current valuation.

“With shares trading at $2.09, investors are currently getting TTNM’s logistics business for free. $2.09 values TTNM’s trucking business at 7.4x 2025e EBITDA, which we view as fair relative to peers and size. If we value TTNM’s logistics at a similar discount to peers (using 9.0x vs. peers at 11.0x), this would add ~$3.90 to the share price, she added.