Broadridge Financial Solutions (NYSE:BR) and Ritchie Bros. Auctioneers (NYSE:RBA) are both business services companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, institutional ownership and analyst recommendations.
Dividends
Broadridge Financial Solutions pays an annual dividend of $2.30 per share and has a dividend yield of 1.5%. Ritchie Bros. Auctioneers pays an annual dividend of $0.88 per share and has a dividend yield of 1.4%. Broadridge Financial Solutions pays out 45.7% of its earnings in the form of a dividend. Ritchie Bros. Auctioneers pays out 66.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Broadridge Financial Solutions has raised its dividend for 13 consecutive years and Ritchie Bros. Auctioneers has raised its dividend for 3 consecutive years. Broadridge Financial Solutions is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Broadridge Financial Solutions and Ritchie Bros. Auctioneers' gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Broadridge Financial Solutions | $4.53 billion | 3.97 | $462.50 million | $5.03 | 30.88 |
Ritchie Bros. Auctioneers | $1.32 billion | 5.16 | $149.04 million | $1.33 | 46.55 |
Broadridge Financial Solutions has higher revenue and earnings than Ritchie Bros. Auctioneers. Broadridge Financial Solutions is trading at a lower price-to-earnings ratio than Ritchie Bros. Auctioneers, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
85.0% of Broadridge Financial Solutions shares are held by institutional investors. Comparatively, 80.3% of Ritchie Bros. Auctioneers shares are held by institutional investors. 2.0% of Broadridge Financial Solutions shares are held by company insiders. Comparatively, 0.8% of Ritchie Bros. Auctioneers shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Broadridge Financial Solutions and Ritchie Bros. Auctioneers, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Broadridge Financial Solutions | 0 | 3 | 3 | 0 | 2.50 |
Ritchie Bros. Auctioneers | 1 | 4 | 2 | 0 | 2.14 |
Broadridge Financial Solutions currently has a consensus price target of $154.1667, suggesting a potential downside of 0.59%. Ritchie Bros. Auctioneers has a consensus price target of $58.9167, suggesting a potential downside of 4.96%. Given Broadridge Financial Solutions' stronger consensus rating and higher possible upside, equities research analysts clearly believe Broadridge Financial Solutions is more favorable than Ritchie Bros. Auctioneers.
Profitability
This table compares Broadridge Financial Solutions and Ritchie Bros. Auctioneers' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Broadridge Financial Solutions | 10.27% | 48.98% | 13.16% |
Ritchie Bros. Auctioneers | 13.03% | 19.76% | 7.55% |
Volatility and Risk
Broadridge Financial Solutions has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500. Comparatively, Ritchie Bros. Auctioneers has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.
Summary
Broadridge Financial Solutions beats Ritchie Bros. Auctioneers on 13 of the 17 factors compared between the two stocks.