Friday, October 11, 2013

Dividend Compass Match 4- CH Robinson vs Ritchie Brothers Auctioneers

In Match 3 of the Dividend Compass Cup, Microsoft narrowly defeated IBM.

In Match 4, we have two smaller companies going head to head - CH Robinson (CHRW) vs Ritchie Brothers Auctioneers (RBA). The Dividend Compass Cup rules are straightforward, we run the two quality, wide moat companies through the Dividend Compass to analyze which is the more interesting investing candidate. Todd Wenning's Dividend Compass scores them 1-5.

CH Robinson began paying its dividend in 1997 and Ritchie Brothers has paid since 2003. So we have two relative newcomers compared to some of the matchups in the competition so far. Let's see how they stack up.

CH Robinson metrics:
CH Robinson's Return on Equity is enough to get any one's attention especially when coupled with very low debt levels.

CH Robinson Score:
CH Robinson has a stellar 5 year average, but on a worrisome note, the scores have declined the last two years. Declining FCF cover is the most problematic, dividend growth has slowed, and so what does that portend for the future?

Meanwhile Ritchie Brothers Auctioneers has improved its FCF cover and is overall trending in the opposite direction.

Ritchie Brothers Auctioneers metrics:

Ritchie Brothers is the inverse of CH Robinson ann average 5 year average but an excellent TTM score. Its Return on Equity numbers have stayed stuck in the 11-12% range and its dividend growth has slowed too.

Ritchie Brothers Auctioneers scores:

This match goes to CH Robinson, its win is not without question marks though. in basketball terms its like a team that built a big first half lead and then barely managed to hold on to the victory. Still a 4.2 five year average exceeds Ritchie Brothers best year 4.15 and that is good enough to make the next round.

Next up is a border battle, McDonald's versus Tim Horton's.

No comments:

Post a Comment