I do not own this stock of Ritchie Bros Auctioneers Inc (TSX-RBA, NYSE-RBA). This was a stock suggestion I got and also it was a dividend growth stock found in the Canadian All Star List. See the blog here.
When I was updating my spreadsheet, I noticed that they seemed to change the way that they calculated Revenue without any comment or explanation. I like it when there is an explanation of such changed and a note on it. In 2016 and 2017 the Revenue in the annual statements are $566.40M and $610.52M. However, in 2018 they restate the Revenue for these years as $1126.977M and $971.191M.
When they do such things, I prefer a number beside the change and a reference to an explanation. They do the American report of 10-K. These reports are huge. However, large reports do not necessarily give you better information. I am not impressed with the 10-K report. More data is not necessarily good data.
Dividends are paid in US$. The dividend yields have been low to moderate. The current yield is 2.13%, with 5, 10 and historical ones at 2.20% 2.18% and 1.95%. The dividend growth has lately been low with the growth at 6.8% per year over the past 5 years. The last dividend increase occurred in 2018 and it was for 5.9%. See chart below.
The Dividend Payout Ratios are fine. The Dividend Payout Ratio for 2018 for EPS is 63% with 5 year coverage at 67% US$. The DPR for CFPS for 2018 is 36% with 5 year coverage at 43% in US$.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good at 0.20. The Liquidity Ratio is low at 1.37 but if you add in cash flow after dividends it is acceptable at 1.53. The Debt Ratio at 1.69 is fine. The Leverage and Debt/Equity Ratios at 2.47 and 1.46 are also fine.
The Total Return per year is shown below for years of 5 to 20 to the end of 2018 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
| CDN$ | Years | Div Gth | Tot Ret | Cap Gain | Div |
|---|---|---|---|---|---|
| 2013 | 5 | 12.20% | 15.55% | 12.89% | 2.66% |
| 2008 | 10 | 8.66% | 7.29% | 5.45% | 1.84% |
| 2003 | 15 | 19.67% | 11.64% | 9.51% | 2.14% |
| 1998 | 20 | 11.42% | 9.81% | 1.61% |
The Total Return per year is shown below for years of 5 to 20 to the end of 2018 in US$.
| US$ | Years | Div Gth | Tot Ret | Cap Gain | Div |
|---|---|---|---|---|---|
| 2013 | 5 | 6.75% | 9.89% | 7.50% | 2.39% |
| 2008 | 10 | 7.49% | 6.42% | 4.39% | 2.02% |
| 2003 | 15 | 13.85% | 11.61% | 9.15% | 2.46% |
| 1998 | 20 | 12.46% | 10.47% | 1.98% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 25.31, 29.30 and 33.30. The corresponding 10 year ratios are 25.35, 29.77 and 34.18. The historical ratios are 25.39, 30.03 and 33.30. The current P/E Ratio is 28.38 in CDN$ based on a stock price of $45.42 and 2018 EPS estimate of $1.60 ($1.19 US$) and a stock price of $45.42. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $19.18 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 1.95, 2.35, and 2.71 in CDN$. The current P/GP Ratio is 2.37 based on a stock price of $45.42 CDN$. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Book Value per Share Ratio of 4.20 US$. The current P/B Ratio is 4.45 US$ based on Book Value of $828M, Book Value per Share of $7.60 and a stock price of $33.81 US$. The current ratio is 6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 1.99% CDN$. The current yield is 2.13% based on dividends of $0.97 CDN$ ($0.72 US$). The current yield is 9% above the historical yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 5.52 US$. The current P/S Ratio is 2.88 based on 2019 Revenue estimate of $1,278M, Revenue per Share of $11.73 and a stock price of $33.81 US$. The current P/S Ratio is some 48% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is probably reasonable and around the median. Since the 2018 statements seems to have changed how they calculate revenues, I would be very leery of relying on the P/S Ratio test. I find nothing to criticize the other tests. They are showing the stock price as reasonable and either above or below the median. Even though the P/E Ratio is high, it is not out of line with the history of the P/E Ratio for this stock.
When I look at analysts’ recommendations, I find Strong Buy (2), Hold (6), Underperform (1) and Sell (1). The consensus would be a Hold, but the recommendations are really all over the place. The 12 months stock price is $31.00US or $41.69 CDN$. This implies a total loss of 6.09% with capital loss at 8.22% and dividends at 2.13%.
See what analysts are saying about on Stock Chase Analysts think it has performed well. Will Ashworth on Motley Fool likes this company and points out it helps people finance purchase of its equipment. A writer on Simply Wall Street thinks the high P/E Ratio says it is overpriced. A writer on Simply Wall Street thinks that mid-caps, like this company, outperform small and large caps.. Martin Roberts on The Enterprise Leader talks about recent institution trades in this company.
British Columbia-based Ritchie Brothers operates the world's leading marketplace for heavy equipment. Started in 1958 as a live auctioneer of industrial equipment, it has greatly expanded its operations to include the sale of construction, agricultural, oilfield, and transportation equipment in a variety of venues. It now operates 40 live auction sites in 13 countries, along with an online marketplace, IronPlanet. Its web site is here Ritchie Bros Auctioneers Inc.
The last stock I wrote about was about was HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF) ... learn more. The next stock I will write about will be Industrial Alliance Ins. & Fin. Srv. Inc (TSX-IAG, OTC-IDLLF) ... learn more on Wednesday, May 29, 2019 around 5 pm. Tomorrow on my other blog I will write about Why I can live off my dividends.... learn more on Tuesday, May 28, 2019 around 5 pm.
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