We Ran A Stock Scan For Earnings Growth And Ritchie Bros. Auctioneers (NYSE:RBA) Passed With Ease

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Ritchie Bros. Auctioneers (NYSE:RBA). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Ritchie Bros. Auctioneers with the means to add long-term value to shareholders.

Check out our latest analysis for Ritchie Bros. Auctioneers

Ritchie Bros. Auctioneers' Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. It certainly is nice to see that Ritchie Bros. Auctioneers has managed to grow EPS by 31% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Ritchie Bros. Auctioneers achieved similar EBIT margins to last year, revenue grew by a solid 14% to US$1.6b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Ritchie Bros. Auctioneers' forecast profits?

Are Ritchie Bros. Auctioneers Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We did see some selling in the last twelve months, but that's insignificant compared to the whopping US$999k that the CEO & Director, Ann Fandozzi spent acquiring shares. We should note the average purchase price was around US$52.25. Big purchases like that are well worth noting, especially for those who like to follow the insider money.

Is Ritchie Bros. Auctioneers Worth Keeping An Eye On?

You can't deny that Ritchie Bros. Auctioneers has grown its earnings per share at a very impressive rate. That's attractive. Growth in EPS isn't the only striking feature with company insiders adding to their holdings being another noteworthy vote of confidence for the company. To put it succinctly; Ritchie Bros. Auctioneers is a strong candidate for your watchlist. We should say that we've discovered 2 warning signs for Ritchie Bros. Auctioneers (1 is concerning!) that you should be aware of before investing here.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Ritchie Bros. Auctioneers, you'll probably love this free list of growing companies that insiders are buying.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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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.