Blackmont Capital Analyst Expects Growth at Ritchie Bros.

Tough economic times are often boom times for auctioneers like Ritchie Bros. Inc. (RBA), says Blackmont Capital Inc. analyst Avi Dalfen, who is expecting an 18% growth in the company’s auction revenue when it reports its third quarter results, offset by higher expenses for future growth.

Mr. Dalfen said in a note to clients:

RBA is increasing its penetration of the global used equipment marekt, estimated at more than $100-billion. Economic downturns increase sales of used equipment available for sale, often to parts of the world where the equipment is in demand.

Still, Mr. Dalfen lowered his target on the company’s shares, to $26 from $31.50, the result of lowering the multiple he is applying to his earnings per share estimate of $0.14, flat compared to the same quarter in 2007.

He said:

Previously, the P/E evaluation was based on the average of its historical high multiples, but given lower equity market valuations, we are reducing our target multiples to the average of historical lows.