Is it a good company at a reasonable price? I think this is a good industrial to invest in if you can stand the volatility. Industrials tend to be more volatile than say Utility stocks. Dividends have lower yield, but grow faster. Results of stock price testing is that the stock price is probably reasonable and may even be cheap. The cheap end will be because they successfully made an acquisition.
I do not own this stock of RB Global Inc (TSX-RBA, NYSE-RBA). This was a stock suggestion I got and it was a dividend growth stock found in the Canadian All Star List. See site.
When I was updating my spreadsheet, I noticed that Ritchie Bros Auctioneers Inc (TSX-RBA, NYSE-RBA) has a name change to RB Global Inc (TSX-RBA, NYSE-RBA). See the announcement on Newswire. In March 203, Ritchie Bros acquires U.S. auto retailer IAA Inc (IAA.N). See press release on Reuters.
If you had invested in this company in December 2012 when this stock was first issued, for $1,016.75 you would have bought 49 shares at $20.75 per share. In December 2022, after 10 years you would have received $457.93 in dividends. The stock would be worth $3,832.29. Your total return would have been $4,290.22.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $20.75 | $1,016.75 | 49 | 10 | $457.93 | $3,832.29 | $4,290.22 |
You can see from the following chart, that this company has had good growth. It is interesting that the lowest growth is Dividends, followed by the stock price. This chart is in US$ as the company financial are in US$.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth US$ | 183.99% | 23.21% |
| 5 | AEPS Growth | 197.53% | 24.37% |
| 5 | Net Income Growth | 326.06% | 33.63% |
| 5 | Cash Flow Growth | 216.58% | 25.92% |
| 5 | Dividend Growth | 52.94% | 8.87% |
| 5 | Stock Price Growth | 93.22% | 14.08% |
| 10 | Revenue Growth US$ | 295.89% | 14.75% |
| 10 | AEPS Growth | 221.33% | 12.38% |
| 10 | Net Income Growth | 301.85% | 14.92% |
| 10 | Cash Flow Growth | 245.41% | 13.20% |
| 10 | Dividend Growth | 121.28% | 8.27% |
| 10 | Stock Price Growth | 176.83% | 10.72% |
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 2.07%. The 10 year median dividend yield is also moderate at 2.14%. The 5 year and historical median dividend yields are low (below 2%) at 1.77% and 1.83%. The dividend growth is moderate (8% to 14% ranges) at 8.9% per year over the past 5 years. The last dividend increase was in 2022 and it was for 8%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 36% with 5 year coverage at 52%. The DPR for 2022 for Adjusted Earnings per Share at 43% with 5 year coverage at 52%. The DPR for 2022 for Cash Flow per Share is 37% with 5 year coverage at 35%. The DPR for 2022 for Free Cash Flow is 23% with 5 year coverage at 34%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 36.36% | 51.77% |
| AEPS | 43.15% | 52.00% |
| CFPS | 36.98% | 34.70% |
| FCF | 23.46% | 34.05% |
Debt Ratios are higher now than in 2022 but hopefully, the higher ratios, due to an acquisition, will improve. The Long Term Debt/Market Cap Ratio for 2022 is 0.09, but higher now at 0.53. It is still fine. The Intangible and Good Will Ratio for 2022 is good at 0.20, but too high in 2023 at 1.27. The Liquidity Ratio for 2022 is low, at 1.21 but if you add in Cash Flow after dividends, it is fine at 1.66. The Debt Ratio for 2022 is high and good 1.82
| Type | Ratio '22 | Ratio '23 |
|---|---|---|
| Lg Term | 0.09 | 0.53 |
| Intang/GW | 0.20 | 1.27 |
| Liquidity | 1.21 | 1.30 |
| Liq. + CF | 1.66 | 1.60 |
| Debt Ratio | 1.82 | 1.82 |
| Leverage | 2.22 | 2.44 |
| D/E Ratio | 1.22 | 1.34 |
The Total Return per year is shown below for years of 5 to 24 to the end of 2022 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 10.55% | 17.96% | 15.75% | 2.21% |
| 2011 | 10 | 11.66% | 16.63% | 14.19% | 2.44% |
| 2006 | 15 | 10.95% | 8.80% | 7.22% | 1.57% |
| 2001 | 20 | 13.40% | 13.83% | 11.73% | 2.10% |
| 1998 | 23 | 12.20% | 10.66% | 1.54% |
The Total Return per year is shown below for years of 5 to 24 to the end of 2022 in US$. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | 8.87% | 16.26% | 14.08% | 2.18% |
| 2012 | 10 | 8.27% | 12.88% | 10.72% | 2.16% |
| 2007 | 15 | 2.53% | 6.57% | 5.06% | 1.51% |
| 2002 | 20 | 13.12% | 15.25% | 12.60% | 2.66% |
| 1998 | 24 | 13.10% | 11.24% | 1.86% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 24.66, 29.30 and 33.30. The corresponding 10 year ratios are 24.41, 29.01 and 33.04. The corresponding historical ratios are 20.77, 28.14 and 32.12. The current P/E Ratio is 28.05 based on a stock price of $71.07 and EPS estimate for 2023 of $2.53 (1.83 US$). The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) Data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 25.21, 30.12 and 34.22. The corresponding 10 year ratios are 21.47, 28.15 and 33.67. The current P/AEPS Ratio is 20.14 based on a stock price of $71.07 and AEPS estimate for 2023 of $3.53 ($2.59 US$). The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a Graham Price of $50.55. The 10-year low, median, and high median Price/Graham Price Ratios are 2.03, 2.49 and 2.97. The current P/GP Ratio is 1.05 based on a stock price of $52.84. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 4.69. The current P/B Ratio is 1.21 based on a Book Value of $4,862M, Book Value per Share of $43.84 and a stock price of $52.84. The current ratio is 75% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$. However, the Book Value increase a lot recently because of their recent purchase.
I get a 10-year median Price/Cash Flow per Share Ratio of 17.96. The current P/CF Ratio is 10.94 based on Cash Flow per Share estimate for 2023 of $4.83, Cash Flow of $535.6 and a stock price of $52.84. The current ratio is 39% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I get an historical median dividend yield of 1.83%. The current dividend yield is 2.04% based on dividends of $1.08 and a stock price of $52.84. The current dividend yield is 12% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.
I get a 10 year median dividend yield of 2.10%. The current dividend yield is 2.04% based on dividends of $1.08 and a stock price of $52.84. The current dividend yield is 3% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 4.79. The current P/S Ratio is 1.69 based on a stock price of $52.84, Revenue estimate for 2023 of $6,466M and Revenue per Share of $31.26. The current ratio is 65% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably reasonable and may even be cheap. The dividend yield tests are showing a reasonable price. The P/S Ratio test is showing a cheap price. Most of rest of the testing, except for the P/E Ratio test, is showing the stock price as cheap. Most of that testing has figures influence by the recent acquisition. The Dividends have not been raised because of this acquisition.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (4) and Hold (4). The consensus would be a Buy. The 12 months stock price consensus is $89.68 ($65.83 US$). This implies a total return of 28.26% with 26.19% from capital gains and 2.07% from dividends.
The last entry on Stock Chase was a buy, but dated in November 2020, quite a while ago. Stock Chase gives this stock 1 star out of 5 for the CDN listing but 4 stars out of 5 for the US listing. For the US listing, there is a buy for 2023 on Stock Chase. It is on the Money Sense list at 69. It is also on the Dividend Aristocrats list. Christopher Liew on Motley Fool thinks this is a great buy and mentions its recent name change and acquisition. Daniel Da Costa on Motley Fool reviews this stock. The company put out a Press Release on their fourth quarter of 2022. The company put out a Press Release on their first quarter of 2023.
Simply Wall Street via Yahoo Finance says this stock is underpriced. Simply Wall Street has 4 warnings of debt is not well covered by operating cash flow; dividend of 2.07% is not well covered by earnings or cash flows; shareholders have been substantially diluted in the past year; and large one-off items impacting financial results. Simply Wall Street gives this stock 3 and one half stars out of 5.
Ritchie Bros. operates the world's largest auction for heavy equipment. The company started as a live auctioneer of industrial equipment, since then it has greatly expanded its operations to include the sale of construction, agricultural, oilfield, and transportation equipment. Ritchie Bros. operates over 40 live auction sites in more than 12 countries. Its web site is here RB Global Inc.
The last stock I wrote about was about was Reitmans (Canada) Ltd (TSX-RET.A, OTC-RTMAF) ... learn more. The next stock I will write about will be IA Financial Corp (TSX-IAG, OTC-IDLLF) ... learn more on June 5, 2023 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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