At US$52.53, Is It Time To Put Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) On Your Watch List?
While Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NYSE, rising to highs of US$72.37 and falling to the lows of US$51.12. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Ritchie Bros. Auctioneers' current trading price of US$52.53 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Ritchie Bros. Auctioneers’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Ritchie Bros. Auctioneers
What is Ritchie Bros. Auctioneers worth?
The stock is currently trading at US$52.53 on the share market, which means it is overvalued by 24% compared to my intrinsic value of $42.32. This means that the opportunity to buy Ritchie Bros. Auctioneers at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Ritchie Bros. Auctioneers’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Ritchie Bros. Auctioneers?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 36% over the next couple of years, the future seems bright for Ritchie Bros. Auctioneers. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in RBA’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe RBA should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on RBA for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for RBA, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Ritchie Bros. Auctioneers at this point in time. For example - Ritchie Bros. Auctioneers has 3 warning signs we think you should be aware of.
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.
This article by Simply Wall St is general in nature. 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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