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Ritchie Bros. (RBA) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Ritchie Bros. Auctioneers (RBA - Free Report) ? Shares have been on the move with the stock up 35% over the past month. The stock hit a new 52-week high of $55.88 in the previous session. Ritchie Bros. Auctioneers has gained 29.7% since the start of the year compared to the 3.5% move for the Zacks Business Services sector and the 13.4% return for the Zacks Auction and Valuation Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 6, 2020, Ritchie Bros. reported EPS of $0.54 versus consensus estimate of $0.36.
For the current fiscal year, Ritchie Bros. is expected to post earnings of $1.25 per share on $1.25 billion in revenues. This represents a -6.02% change in EPS on a -5.41% change in revenues. For the next fiscal year, the company is expected to earn $1.58 per share on $1.35 billion in revenues. This represents a year-over-year change of 26.98% and 8.13%, respectively.
Valuation Metrics
Ritchie Bros. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Ritchie Bros. has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 44.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 26.7X versus its peer group's average of 26.7X. Additionally, the stock has a PEG ratio of 6.38. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Ritchie Bros. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Ritchie Bros. passes the test. Thus, it seems as though Ritchie Bros. shares could have a bit more room to run in the near term.
How Does Ritchie Bros. Stack Up to the Competition?
Shares of Ritchie Bros. have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Republic Services (RSG - Free Report) , FTI Consulting (FCN - Free Report) , and Trane Technologies plc (TT - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Ritchie Bros.even beyond its own solid fundamental situation.
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Ritchie Bros. (RBA) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Ritchie Bros. Auctioneers (RBA - Free Report) ? Shares have been on the move with the stock up 35% over the past month. The stock hit a new 52-week high of $55.88 in the previous session. Ritchie Bros. Auctioneers has gained 29.7% since the start of the year compared to the 3.5% move for the Zacks Business Services sector and the 13.4% return for the Zacks Auction and Valuation Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 6, 2020, Ritchie Bros. reported EPS of $0.54 versus consensus estimate of $0.36.
For the current fiscal year, Ritchie Bros. is expected to post earnings of $1.25 per share on $1.25 billion in revenues. This represents a -6.02% change in EPS on a -5.41% change in revenues. For the next fiscal year, the company is expected to earn $1.58 per share on $1.35 billion in revenues. This represents a year-over-year change of 26.98% and 8.13%, respectively.
Valuation Metrics
Ritchie Bros. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Ritchie Bros. has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 44.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 26.7X versus its peer group's average of 26.7X. Additionally, the stock has a PEG ratio of 6.38. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Ritchie Bros. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Ritchie Bros. passes the test. Thus, it seems as though Ritchie Bros. shares could have a bit more room to run in the near term.
How Does Ritchie Bros. Stack Up to the Competition?
Shares of Ritchie Bros. have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Republic Services (RSG - Free Report) , FTI Consulting (FCN - Free Report) , and Trane Technologies plc (TT - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Ritchie Bros.even beyond its own solid fundamental situation.