Analyst Note| Dawit Woldemariam |
Ritchie Bros. Auctioneers reported solid second-quarter results, leading us to increase our fair value estimate to $43.50/CAD 56 per share from $40.50/CAD 53. We raised our near-term sales and margin forecast to reflect our expectations of a strong demand environment for the company in the back half of the year. In the quarter, net sales increased 22% year on year to $484 million, showing that service and inventory sales remain healthy. Service revenue was up 13% year on year, thanks to solid fee growth of over 21%. Inventory sales also grew, rising close to 38% compared with the year-ago quarter. Ritchie Bros.’ ability to drive service revenue in a tight used-equipment market gives us confidence to forecast 13% sales growth in 2022.