United Rentals (NYSE: URI) and Ritchie Bros. Auctioneers (NYSE:RBA) are both mid-cap construction companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Dividends

Ritchie Bros. Auctioneers pays an annual dividend of $0.68 per share and has a dividend yield of 2.2%. United Rentals does not pay a dividend. Ritchie Bros. Auctioneers pays out 144.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ritchie Bros. Auctioneers has raised its dividend for 14 consecutive years.

Insider & Institutional Ownership

93.7% of United Rentals shares are held by institutional investors. Comparatively, 96.0% of Ritchie Bros. Auctioneers shares are held by institutional investors. 1.2% of United Rentals shares are held by company insiders. Comparatively, 0.4% of Ritchie Bros. Auctioneers shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares United Rentals and Ritchie Bros. Auctioneers’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
United Rentals $5.98 billion 1.87 $1.75 billion $6.89 19.20
Ritchie Bros. Auctioneers $566.33 million 5.95 $203.46 million $0.47 66.96

United Rentals has higher revenue and earnings than Ritchie Bros. Auctioneers. United Rentals 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.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for United Rentals and Ritchie Bros. Auctioneers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Rentals 1 4 10 0 2.60
Ritchie Bros. Auctioneers 2 5 4 0 2.18

United Rentals presently has a consensus target price of $126.92, indicating a potential downside of 4.07%. Ritchie Bros. Auctioneers has a consensus target price of $31.90, indicating a potential upside of 1.37%. Given Ritchie Bros. Auctioneers’ higher probable upside, analysts plainly believe Ritchie Bros. Auctioneers is more favorable than United Rentals.

Profitability

This table compares United Rentals and Ritchie Bros. Auctioneers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Rentals 9.86% 46.01% 6.42%
Ritchie Bros. Auctioneers 8.96% 14.72% 6.14%

Risk & Volatility

United Rentals has a beta of 2.42, indicating that its share price is 142% more volatile than the S&P 500. Comparatively, Ritchie Bros. Auctioneers has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Summary

United Rentals beats Ritchie Bros. Auctioneers on 11 of the 17 factors compared between the two stocks.

United Rentals Company Profile

United Rentals, Inc. is a holding company. The Company is an equipment rental company, which operates throughout the United States and Canada. It operates through two segments: general rentals, and trench, power and pump. The general rentals segment includes the rental of construction, aerial, industrial and homeowner equipment and related services and activities. The trench, power and pump segment includes the rental of specialty construction products and related services. Its general rentals segment includes the rental of general construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts and material handling equipment; aerial work platforms, such as boom lifts and scissor lifts, and general tools and light equipment, such as pressure washers, water pumps and power tools. As of January 1, 2017, it operated 887 rental locations. The Company conducts its operations through its subsidiary, United Rentals (North America), Inc. (URNA) and subsidiaries of URNA.

Ritchie Bros. Auctioneers Company Profile

Ritchie Bros Auctioneers Inc is a Canada-based holding company. The Company is an industrial auctioneer and used equipment distributor, selling used equipment and other assets. Its segments include Core Auction, which is a network of auction locations that conduct live, unreserved auctions with both on-site and online bidding, and Other, which includes its EquipmentOne and Mascus International Holding B.V. (Mascus) online services. EquipmentOne is an online marketplace that equipment sellers can navigate independently. EquipmentOne facilitates the completion of sales through a settlement process managed by EquipmentOne that protects both the seller and the buyer. Mascus is an online equipment listing service for used heavy machinery and trucks. It offers subscriptions to equipment dealers, brokers, exporters and equipment manufacturers to list equipment available for sale at a listed price. The Company, through Mascus, provides online advertising services, business tools and solutions.

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