RB GLOBAL INC (NYSE:RBA) – A Quality Stock Worth Considering

RB GLOBAL INC (NYSE:RBA) was identified through our Caviar Cruise screen, which focuses on high-quality companies with strong fundamentals. RBA operates a global platform for commercial asset and vehicle transactions, serving industries like automotive, construction, and transportation. The company meets several key criteria for quality investing, including solid profitability, manageable debt, and consistent growth.

Why RBA Fits the Quality Investing Criteria

• Strong Revenue and EBIT Growth
  RBA has delivered a 5-year EBIT growth rate of 29.02%, significantly outpacing its revenue growth of 3.52%. This suggests improving operational efficiency and pricing power.

• High Return on Invested Capital (ROIC)
  With an ROIC (excluding cash and goodwill) of 19.75%, RBA generates strong returns on its capital investments, a hallmark of a well-managed business.

• Healthy Debt Management
  The company’s debt-to-free cash flow ratio stands at 4.00, meaning it could repay its debt in about four years using current cash flows—a reasonable level for a quality company.

• Exceptional Profit Quality
  RBA’s 5-year average profit quality (free cash flow to net income) is 143.60%, indicating it converts earnings into cash efficiently, a sign of financial strength.

Fundamental Analysis Summary

RBA’s financial health is solid, with strong margins and manageable leverage. Its operating margin of 17.77% and gross margin of 46.24% are among the best in its industry. However, valuation metrics suggest the stock is priced at a premium, with a P/E ratio of 30.71, above the industry average.

Analysts expect earnings to grow at 12.16% annually, supporting the case for future performance. While the dividend yield is modest at 1.11%, the company has increased payouts for over a decade.

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Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.