Should You Investigate Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) At US$54.48?

Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$71.09 at one point, and dropping to the lows of US$50.44. 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$54.48 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.

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Is Ritchie Bros. Auctioneers Still Cheap?

Good news, investors! Ritchie Bros. Auctioneers is still a bargain right now. According to my valuation, the intrinsic value for the stock is $73.95, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Ritchie Bros. Auctioneers’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.

What does the future of Ritchie Bros. Auctioneers look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 -15% expected next year, 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. I recommend you think about 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. Our analysis shows 2 warning signs for Ritchie Bros. Auctioneers (1 makes us a bit uncomfortable!) and we strongly recommend you look at them before investing.

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.

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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.