Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. Stock price is probably on the expensive side. A positive is that the last dividends increase at 10% is higher than it has been over the past 5 years. The company has done well during the recent pandemic. See my spreadsheet on Ritchie Bros Auctioneers Inc.
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 of blogger Dividend Growth investing and Retirement.
When I was updating my spreadsheet, I noticed that this company has been doing very well lately, especially considering we are in a pandemic.
The dividend yields are currently low with dividend growth low. The current dividend yield is low (under 2%) at 1.47%. The 5 and 10 year median dividend yields are moderate (2% to 4% ranges) at 2.13% and 2.14%. The historical median dividend yield is low at 1.95%. The dividend growth is low (under 8%) over the past 5 years at 4% per year. However, the last dividend increase was moderate (8% to 14% ranges) at 10%
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 55% with 5 year coverage at 66%. The DPR for CFPS for 2020 is 32% with 5 year overage at 37%. The DPR for Free Cash Flow is 43% with 5 year coverage at 46%. However, the sites I looked at for FCF disagree on what it is.
Debt Ratios are fine. The Long Term Debt/Market Cap for 2020 is 0.08 and is low and good. The Liquidity Ratio for 2020 is low at 1.08, but if you add in cash flow after dividends it is better at 1.40. However, I do prefer this to be at 1.50 or higher. The Debt Ratio at 1.76 is good. The Leverage and Debt/Equity Ratios are fine at 2.32 and 1.32.
The Total Return per year is shown below for years of 5 to 22 to the end of 2020 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 5.18% | 23.53% | 21.56% | 1.97% |
| 2010 | 10 | 10.12% | 16.15% | 14.40% | 1.75% |
| 2005 | 15 | 10.94% | 13.51% | 11.89% | 1.62% |
| 2000 | 20 | 13.24% | 17.04% | 15.23% | 1.80% |
| 1998 | 22 | 13.58% | 12.32% | 1.26% |
The Total Return per year is shown below for years of 5 to 22 to the end of 2020 in US$. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 6.96% | 25.90% | 23.88% | 2.02% |
| 2010 | 10 | 7.44% | 13.41% | 11.80% | 1.61% |
| 2005 | 15 | 2.87% | 13.01% | 11.32% | 1.69% |
| 2000 | 20 | 13.34% | 18.42% | 16.25% | 2.16% |
| 1998 | 22 | 14.81% | 13.32% | 1.49% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 25.31, 35.06 and 45.77. The corresponding 10 year ratios are 24.98, 29.77 and 34.18. The corresponding historical ratios are 20.77, 28.14 and 32.12. The current P/E Ratio is 32.91 based on a stock price of $72.25 and EPS estimate for 2021 of $2.20 ($1.82US$). The current ratio is between the median and high 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.
I get a Graham Price of $19.36. The 10 year low, median, and high median Price/Graham Price Ratios are 1.95, 2.52 and 3.01. The current P/GP Ratio is 3.09 based a stock price of $72.25. The current ratio is above the 10 year high median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 4.41. The current P/B Ratio is 6.55 based on a Book Value of $1,005M, Book Value per Share of $9.15 and a stock price of $59.91. The current ratio is 49% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 17.96. The current P/CF Ratio is 22.78 based on Cash Flow per Share estimate for 2021 of $2.63, Cash Flow of $289M and a stock price of $59.91. The current ratio is 27% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
I get an historical median dividend yield of 1.95%. The current dividend yield is 1.47% based on a stock price of $59.91 and dividends of $0.88. The current dividend yield is 25% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
I get a 10 year median dividend yield of 2.18%. The current dividend yield is 1.47% based on a stock price of $59.91 and dividends of $0.88. The current dividend yield is 33% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar answer in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 5.19. The current P/S Ratio is 4.43 based on Revenue estimate for 2021 of $1,478M, Revenue per Share of $13.53 and a stock price of $59.91. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. You will get a similar answer in CDN$.
Results of stock price testing is that the stock price is probably expensive. I like the fact that the stock passes the P/S Ratio test and is showing as reasonable. However, the dividends paid and their increases tend to reflect how good the management feels about the future. A positive point is that the last increase at 10% is higher than it has been in the recent pass. Most of the other tests show the stock price as expensive except for the P/E Ratio test.
Is it a good company at a reasonable price? I like this company. It has done very well over the long term and expect it to continue to do so. However, I feel that the current stock price is on the expensive side.
When I look at analysts’ recommendations, I find Strong Buy (2), Hold (6) and Underperform (2). The consensus would be a Hold. The 12 month stock price consensus is $75.82 ($62.86 US$). This implies a total return of 6.40% with 1.47% from dividends and a capital gain of 4.93%.
There are few analysts following this stock but the last one on this site liked the company on Stock Chase. Ambrose O'Callaghan on Motley Fool in February 2021 talked about three cheap stocks to buy, including this stock. The executive summary on Simply Wall Street listed 2 risks and gave this stock 4 stars out of 5. A writer on Simply Walls Street is concerned about the low growth in EPS for future dividend increases. A writer on Simply Wall Street talks about the stock increase for this company recently. He notes that analyst expect this to continue.
Ritchie Bros. is a global asset management and disposition company, offering customers end-to-end solutions for buying and selling used heavy equipment, trucks, and other assets. Its web site is here Ritchie Bros Auctioneers 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 IA Financial Corp (TSX-IAG, OTC-IDLLF) ... learn more on Wednesday, June 2, 2021 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks June 2021.... learn more on Tuesday, June 01, 2021 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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