RBA recently went through a large acquisition by acquiring IAA – a global player in the digital marketplace for commercial assets and vehicles and is now trading at 23.5x times' Forward P/E. The company’s largest competitor is CPRT. As a result of the recent acquisition, the balance sheet is leveraged, with a net debt of $4.2B. The company is currently paying a dividend, but going forward the priority would be to pay down debt to a manageable level so we would not really expect dividend hikes. RBA typically trades at a cheaper valuation compared to peer like CPRT. We think RBA is an okay player in the industry, but we prefer CPRT due to its better track record of operations and growth. RBA historically has been a strong performer, but investors did not like the IAA deal much, and we would like to give the integration some more time.
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