Ritchie Bros. Auctioneers Inc.RBA

Morningstar Rating

Stock Research and Analysis

by Basili Alukos, CPA

With its enviable position as the largest seller of construction equipment, we think Ritchie Bros. will deliver impressive results over the next decade regardless of the strength of any economic recovery.

Once considered to be at a disadvantage due Read more

Bulls Say

Ritchie Bros. collects auction proceeds within seven days from bidders but waits 21 days to pass the proceeds along to consignors. This astute working-capital management effectively creates a 14-day float of funds on which the company can earn interest.

Despite the significant downturn, Ritchie Bros. experienced a 25% increase in the number of registered bidders at its industrial auctions for the first three quarters of 2009 compared to the same period last year.

Ritchie Bros. held its first auction in Eastern Europe (Poland) in 2008, a small sign that its international expansion is working. This global expansion should help the firm grow once the global economy recovers. Read more

Bears Say

Ritchie Bros. derives approximately 25% of its auction proceeds from reselling equipment purchased before an auction and by guaranteeing the seller a certain amount prior to the sale. Although the firm has more than 50 years of experience valuing assets, the inability to price equipment accurately could force the firm to incur steep losses on numerous transactions.

A partnership of several Caterpillar CAT dealers in the Midwest recently formed Caterpillar Auction Services, which provides unreserved auctions for new and used Cat branded equipment. Although it's currently a much smaller and mix-constrained auctioneer, it could emerge as a more viable competitor in the coming years.

Ritchie Bros. must maintain a stellar reputation as an unbiased, independent auctioneer if it intends to keep up its torrid growth pace. Any blemish could drastically reduce its success in capturing new clients. Read more

Strategy

Ritchie Bros.' near-term focus is on growing its presence in the developed markets, such as the U.S., by opening at least two new or replacement facilities per year. In the longer term, the company hopes Read more

Management

CEO James Blake has tremendous experience with Ritchie Bros. Blake started his career working with the firm in 1991 and has since climbed through the ranks, including his last position as CFO, before taking over his current role in 2004 when co-founder Read more

Profile

With more than 110 locations in more than 25 countries, Ritchie Bros. Auctioneers is the world's largest auctioneer of industrial and agricultural equipment. The company Read more

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