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Going Once, Going Twice: Alternative Data Gives IronPlanet Acquisition Second Take

Ritchie Bros. Auctioneers (TSE:RBA) (NYSE:RBA), the world’s largest industrial auctioneer, released its first earnings announcement yesterday after its May 2017 acquisition of IronPlanet for USD 750m.

The reported EPS of USD 0.33 and USD 166.19m revenue handily beat the consensus estimates of analysts polled by Thomson Reuters, which called for adjusted EPS of USD 0.31 on revenue of USD 163.4m.

The stock has responded by rallying over 8% in next-day trading.

We believe that analysts underestimated the results because they lacked insight into the boost in gross merchandise volume (GMV) that the IronPlanet acquisition provided.

Ritchie Bros. has underperformed the S&P 500 by -30% year-to-date on the back of lowered earnings and revenue expectations; however, in advance of Q2 earnings, Quandl’s data suggested that the underperformance of RBA’s core business may be more than offset by the IronPlanet acquisition. The Q2 earnings report confirmed this thesis, stating that “revenues increased…primarily due to the acquisition of IronPlanet”.

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To further demonstrate the utility of the RBIP database, we next examined the key auctions highlighted by Ritchie Bros. in their 2017 Q2 earnings report. We first grouped all Q2 auctions occurring at these sites and then compared their year-over-year GAP on a category level, as shown in the table below:

Our analysis has determined that gross auctions proceeds (GAP) for both Edmonton and Houston experienced declines stemming primarily from the oil and gas, construction, and demolition categories. This finding alone showcases the power of the RBIP database. Understanding the main drivers for each auction site as well as the regional trends that affect them could yield substantial insights into future GAP, providing an edge to both analysts and investors alike.

This data is now available via our recently launched RBIP dataset and provides item-level sales data for both Ritchie Bros. and IronPlanet. Our offering provides insights into monthly auction and quarterly earnings announcements, at least four days and four weeks ahead of the market, respectively.

Analysts who study this segment and investors with positions in Ritchie Bros. would benefit from Quandl’s RBIP dataset.

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