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Shares of Ritchie Bros. Tumble 9% After Disappointing 3rd-Quarter Earnings

By Daniel Miller - Nov 10, 2017 at 4:15PM

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Ritchie Bros. shares are down again today. The company's stock has hit a speed bump in 2017, but it should still have a bright future.

What happened?

Shares of Ritchie Bros Auctioneers, Inc. ( RBA 1.44% ), the world's largest seller of used heavy equipment via its location and online auctions, are tumbling 9% as of 3:20 p.m. EST after the company fell short of analysts' third-quarter profit estimates.

So what

Ritchie Bros. revenue checked in at $141 million during the third quarter, a 9% increase over the prior year, topping analysts' estimates calling for $139.4 million. However, the 9% increase was largely driven by acquisitions, and on a like-for-like basis revenue was down 8.3%. Unfortunately, the top-line increase didn't filter down to the bottom line, as the heavy equipment auctioneer's adjusted profit of $0.09 per share fell short of analysts' estimates calling for $0.14 per share. 

Said Ravi Saligram, CEO of Ritchie Bros., in a press release:

Our third quarter revenues declined on a like-for-like basis versus prior year, which is primarily related to the significant equipment supply shortage especially in the U.S., as dealers and end users continue to experience high equipment utilization rates. We faced a tough comparable quarter due to the massive Columbus auction last year as well as growing pains of sales force integration and execution, as our legacy RB and IP teams learn to sell each others' offerings.

Heavy equipment on display in front of row of auction participations

Image source: Ritchie Bros. Auctioneers.

Now what

The kind of speed bump Ritchie Bros. hit in 2017 hasn't been uncommon for the stock over the past two decades.

RBA Chart

RBA data by YCharts

Despite missing earnings estimates, management is capable of righting the ship and believes the combination of Ritchie Bros. and Iron Planet will deliver growth going forward as the two former competitors develop synergies, expand business internationally, and cross-sell more of the company's products and services.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Ritchie Bros. Auctioneers Incorporated Stock Quote
Ritchie Bros. Auctioneers Incorporated
$69.56 (1.44%) $0.99

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