Is it a good company at a reasonable price? The stock price is probably expensive. A dividend below 2% is low and often in the past, you could buy this stock with a dividend yield over 2% and that would be the time to buy this stock. Shareholders have done well with this stock over a long period of time. I would worry about the increasing debt load. This is a dividend growth stock and it is the sort that I like.
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 site.
When I was updating my spreadsheet, I noticed that analysts expected the EPS to go up by 18% to $1.82, but instead it went down 12% to $1.36. Also, I have been looking for Adjusted Earnings per Share (AEPS) as more and more companies are providing these figures. The reason for AEPS is to provide EPS that do not include special items. The AEPS for 2021 for this company was $1.94.
Their debt load has increased a lot in 2021. Long Term Debt/Market Cap Ratio for 2020 was 0.08 and in 2021 is 6.11. The increase is 176%. The Leverage and Debt/Equity Ratios went from fine at 2.33 and 1.33 in 2021 to too high at 3.36 and 2.36 in 2022. I prefer these ratios to be below 3.00 and 2.00, respectively.
If you had invested in this company in December 2010, $1008.00 you would have bought 45 shares at $22.40 per share. In December 2021, after 10 years you would have received $378.20 in dividends. The stock would be worth $3,483.45. Your total return would have been $3,861.65.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $22.40 | $1,008.00 | 45 | 10 | $378.20 | $3,483.45 | $3,861.65 |
The dividend yields are low with dividend growth low. The current dividend yield is low (below 2%) at 1.66%. The 5 year and historical median dividend yields are also low at 1.95% and 1.89%. The 10 year median dividend yield is moderate (2% to 4% ranges) at 2.14%. The dividends have increased at a low rate (below 8%) at 7.3% per year over the past 5 years. The last dividend increase was in 2022 and it was for 13.6%. Dividends are paid in US$.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 69% with 5 year coverage at 65%. The DPR for Adjusted Earnings per Share for 2021 is 48% with 5 year coverage at 61%. The DPR for Cash Flow per Share for 2021 is 35% with 5 year coverage at 36%. The DPR for Free Cash Flow for 2021 is 33% with 5 year coverage at 42%.
Debt Ratios are fine, but could improve. The Long Term Debt/Market Cap Ratio for 2021 is 0.26 and is low and fine. The Liquidity Ratio for 2021 is low at 1.30. If you add in cash flow after dividends, it is at 1.66. However, it is lower at 1.07 and with cash flow after dividends it is 1.34 after the first quarter. I prefer this to be at 1.50 or higher. The debt ratio for 2021 is 1.42. I also prefer this to be at least 1.50. It is better, but not yet at 1.50 in the first quarter at 1.46.
The Total Return per year is shown below for years of 5 to 23 to the end of 2021 CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 6.10% | 12.98% | 11.19% | 1.79% |
| 2011 | 10 | 10.42% | 15.29% | 13.20% | 2.09% |
| 2006 | 15 | 9.56% | 10.80% | 9.15% | 1.65% |
| 2001 | 20 | 13.14% | 15.12% | 13.09% | 2.03% |
| 1998 | 23 | 12.55% | 11.10% | 1.45% |
The Total Return per year is shown below for years of 5 to 23 to the end of 2021 US$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 7.33% | 14.29% | 12.48% | 1.81% |
| 2011 | 10 | 8.01% | 12.62% | 10.73% | 1.89% |
| 2006 | 15 | 2.56% | 10.27% | 8.56% | 1.71% |
| 2001 | 20 | 13.26% | 16.92% | 14.40% | 2.52% |
| 1998 | 23 | 13.73% | 12.03% | 1.71% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 27.23, 33.22 and 48.83. The corresponding 10 year ratios are 25.22, 29.83 and 33.59. The corresponding historical ratios are 22.32, 28.34 and 31.98. The current P/E Ratio is 23.62 based on a stock price of $76.25 and EPS estimate for 2022 of $3.23. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I also have Adjusted Earnings per Share. The 5 year low, median, and high median P/AEPS Ratios are 26.02, 32.03 and 37.68. The corresponding 10 year ratios are 23.45, 29.59 and 34.03. The current P/AEPS Ratio is 28.95 based on AEPS of the last 12 months of $2.63 and a stock price of $76.25. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I get a Graham Price of $31.92. The 10 year low, median, and high median Price/Graham Price Ratios are 2.06, 2.63 and 3.16. The current P/GP Ratio is 2.39 based on a stock price of $76.25. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 4.56. The current P/B Ratio is 5.44 based on a Book Value of $1,225M, Book Value per Share of $11.07 and a stock price of $60.24. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and 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 ratio is 21.14 based on EPS estimate for 2022 of $2.85, Cash Flow of $315M and a stock price of $60.24. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar answer in CDN$.
I get an historical median dividend yield of 1.90%. The current dividend yield is 1.66% based on dividends of $1.00 and a stock price of $60.24. The current dividend yield is 13% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar answer in CDN$.
I get a 10 year median dividend yield of 2.18%. The current dividend yield is 1.66% based on dividends of $1.00 and a stock price of $60.24. The current dividend yield is 24% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar answer in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 5.03. The current P/S Ratio is 4.26 based on Revenue for 2022 of $1,563M, Revenue per Share of $14.13 and a stock price of $60.24. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar answer in CDN$.
Results of stock price testing is that the stock price could be reasonable, but it is probably expensive. The 10 year dividend yield says the stock price is expensive, but the historical dividend yield test just say it is above the median. My worry is that the 10 year median dividend yield test says the stock is expensive. I know some other tests, like to P/E Ratio test shows the stock as cheap, but the P/E Ratios are quite high as they are over 20.00. The P/AEPS Ratios, P/B Ratios and P/GP Ratios are all quite high. Of course, that points to ratios that have been high for a while. In fact they have always been relatively high.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), Hold (8) and Sell (1). The consensus is a Hold. The 12 months stock price consensus is $74.63 ($58.94 US$). This implies a total return of a loss of 0.46%, with a capital loss of 2.12% and dividends of 1.66%.
The last entry was in 2020 so on Stock Chase the analysts have lost interest. They also give this stock 1 star out of 5. Christopher Liew on Motley Fool says buying this stock is a great way to diversify your portfolio. Ambrose O'Callaghan on Motley Fool thinks that now is the time to buy this stock. The company reports on Newswire their fourth quarter results. The company reports on Newswire their first quarter results for 2022.
A Simply Wall Street report on Yahoo Finance says that this is a good stock from a dividend point of view. Simply Wall Street list 3 risks of has a high level of debt, large one-off items impacting financial results and significant insider selling over the past 3 months. I note that the CEO has sold stocks over the past year and CFO has bought stocks over the past year. The company also puts out an Adjusted Earnings per Share because of the problem of one-off items impacting financial results.
Ritchie Bros. operates the world's leading marketplace 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, along with online marketplaces, including IronPlanet, Marketplace-E, and GovPlanet. 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 be IA Financial Corp (TSX-IAG, OTC-IDLLF) ... learn more on Friday, June 3, 2022 around 5 pm. Tomorrow on my other blog I will write about John Mauldin.... learn more on Thursday, June 2, 2022 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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