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When Should You Buy Ritchie Bros. Auctioneers Incorporated (NYSE:RBA)?

Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Ritchie Bros. Auctioneers’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Ritchie Bros. Auctioneers

What's The Opportunity In Ritchie Bros. Auctioneers?

Good news, investors! Ritchie Bros. Auctioneers is still a bargain right now. According to my valuation, the intrinsic value for the stock is $89.01, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Ritchie Bros. Auctioneers’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Ritchie Bros. Auctioneers?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -4.2% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Ritchie Bros. Auctioneers. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although RBA is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to RBA, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on RBA for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Ritchie Bros. Auctioneers, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Ritchie Bros. Auctioneers.

If you are no longer interested in Ritchie Bros. Auctioneers, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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