As of May 22, 2025, Ritchie Bros. Auctioneers Inc's estimated intrinsic value ranges from $70.64 to $129.07 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $129.07 | -14.7% |
| Discounted Cash Flow (5Y) | $107.58 | -28.9% |
| Dividend Discount Model (Multi-Stage) | $72.70 | -52.0% |
| Dividend Discount Model (Stable) | $77.63 | -48.7% |
| Earnings Power Value | $70.64 | -53.3% |
Is Ritchie Bros. Auctioneers Inc (RBA.TO) undervalued or overvalued?
With the current market price at $151.38, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Ritchie Bros. Auctioneers Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.62 | 0.72 |
| Cost of equity | 6.3% | 8.6% |
| Cost of debt | 5.4% | 10.5% |
| Tax rate | 24.8% | 25.4% |
| Debt/Equity ratio | 0.14 | 0.14 |
| After-tax WACC | 6.0% | 8.5% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $77 | $16,467M | 82.0% |
| 10-Year Growth | $92 | $19,316M | 68.8% |
| 5-Year EBITDA | $66 | $14,373M | 79.4% |
| 10-Year EBITDA | $81 | $17,182M | 64.9% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $815M |
| Discount Rate (WACC) | 8.5% - 6.0% |
| Enterprise Value | $9,620M - $13,524M |
| Net Debt | $2,209M |
| Equity Value | $7,412M - $11,315M |
| Outstanding Shares | 185M |
| Fair Value | $40 - $61 |
| Selected Fair Value | $70.64 |
| Metric | Value |
|---|---|
| Market Capitalization | $28023M |
| Enterprise Value | $31108M |
| Trailing P/E | 48.57 |
| Forward P/E | 46.25 |
| Trailing EV/EBITDA | 12.20 |
| Current Dividend Yield | 119.72% |
| Dividend Growth Rate (5Y) | 27.22% |
| Debt-to-Equity Ratio | 0.14 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $38.72 |
| Discounted Cash Flow (5Y) | 25% | $26.89 |
| Dividend Discount Model (Multi-Stage) | 20% | $14.54 |
| Dividend Discount Model (Stable) | 15% | $11.64 |
| Earnings Power Value | 10% | $7.06 |
| Weighted Average | 100% | $98.86 |
Based on our comprehensive valuation analysis, Ritchie Bros. Auctioneers Inc's weighted average intrinsic value is $98.86, which is approximately 34.7% below the current market price of $151.38.
Key investment considerations:
Given these factors, we believe Ritchie Bros. Auctioneers Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.