RB Global Inc. (RBA)

Investment Committee Summary

Investment Thesis

RB Global is a business-to-business commercial services group headquartered in Burnaby, Canada and operating under the Ritchie Bros. name. A caveat belongs up front: the engine maps it to a recurring-services template whose driver list — waste, uniforms, pest control, facilities — does not describe what this company actually does, so the template's logic of repeat volume plus pricing plus bolt-on acquisitions should be read as a proxy for the economics rather than as a description of the business. Within that frame the numbers are legible. At $81.88 on 9 September 2026 the shares are trading cheap to the triangulated $93.24 (+14%) on roughly 19x forward earnings, with an operating margin near 22% and net debt of ~$3.4B; the twelve-month anchor of $110 sits well above both the quote and the triangulated value, so the anchors disagree and the BUY sits between them. The quote itself is close to the bottom of its 52-week range. The variable that decides the outcome is price: whether the company holds its price per unit of service as volumes cycle. The most damaging risk is that competition attacks price rather than volume, because price falls straight through to the operating line with no warning from the volume line first.

Narrative drafted 2026-08-16 by claude-opus-5 under supervision; reviewed by Marinus 2026-08-16.

The dashboard below is the whole argument on one page: spot ($81.88) against each valuation anchor, the scenario tree, technicals and the options-implied move.

Anti-Thesis (The Real Bear Case)

The bear mechanism is a competitive reset in pricing. A services business earning a margin near 22% earns it because customers have not lately had a cheaper credible alternative; when one appears, the damage does not present as lost customers but as a lower price for the same work, and that reaches the operating line immediately. Two things make it worse here. Growth has been supplemented by acquisition, so a slower pace of deals removes a slice of reported growth without anything happening operationally. And net debt of ~$3.4B means the acquisition programme and the equity compete for the same cash whenever the cost of debt stays high. The Industrials — Services house view frames the structural state as Pricing / AI-Disintermediation Reset; the model's own structural branch resolves at around three-fifths of the current quote and below the past year's low. Nothing in that path requires a recession — it only requires the price to be contested.

Key Debate

P/E Multiple explains 60% of Monte Carlo outcome variance — i.e. value is set by the multiple the market will pay, a rate/sentiment regime bet as much as an earnings bet.

What the Market Is Pricing In

At the current price, the market pays 18.8× consensus forward EPS, vs the house DCF terminal 21.0×, and a peer median 10.0×. The house DCF sits 4% below spot, so the market is pricing in more than the house case — roughly 0.5pp of revenue CAGR.

Variant perception: the house view is below-consensus, and the thesis is primarily multiple-driven.

Scenario Analysis

The scenario tree spans a structural 'Structural — Pricing / Competition Reset' downside ($55.92) to a 'Bull — Defensive Re-Rate' bull case ($172); the probability-weighted blend (PWEV $110) is +34% versus spot.

Share-count charge: none applied. The probability-weighted value above is the gross per-share figure — no annual dilution is deducted — stock-based compensation runs at 1.6% of revenue; free cash flow net of SBC is $0.66B. SBC is therefore disclosed, not charged: read the per-share figures as before dilution.

Scenario rationale — the driver path behind every target:

• Structural — Pricing / Competition Reset (20%, $55.92). Structural impairment — pricing / competition reset: earnings AND the multiple compress together. Target sits below the 52-week low by construction.
• Volume / Recession Pressure (17%, $90.46). Cyclical downturn — contracted service revenue + pricing + retention + bolt-on M&A weakens for 1–2 years before normalising.
• Base — Pricing + Volume + Tuck-Ins (35%, $116). Mid-cycle — normalised contracted service revenue + pricing + retention + bolt-on M&A; disciplined capital allocation; steady returns.
• Growth — Share / New-Service Expansion (20%, $146). Upside — share + new-service expansion lifts earnings above mid-cycle; the multiple expands modestly.
• Bull — Defensive Re-Rate (8%, $172). Upside tail — sustained tight conditions or a structural re-rate on share + new-service expansion.

Valuation Triangulation

Three weighted anchors — an intrinsic dcf, a scenario-weighted pwev and a monte carlo median (student-t + regime switching) — read them with their basis in mind. The Monte Carlo, the DCF terminal and any peer re-rate key off a market multiple, so they are not fully independent; only discounted cash flows themselves are genuinely multiple-free. The discipline is to read the spread and weight the cash-based view, not to treat three numbers as three independent votes.

The house blend DECLARES five anchor weights — DCF 35%, scenario PWEV 25%, Monte Carlo 15%, sum-of-parts 15%, peer re-rate 10%. For this name sum-of-parts, peer P/E re-rate are not computed, so 25% of the declared weight is redistributed across the anchors that exist — which is why the weights above differ from the declared ones. The fair value is unaffected by this disclosure; the blend has always worked this way.

Peer EV/Revenue re-rate — 0% weight: it duplicates the peer-multiple information already carried by the Peer P/E anchor while ignoring margin mix; weighting both would double-count the peer view. Shown as a cross-check.

Monte Carlo — the outcome distribution

10,000 paths, Student-t shocks (fat tails) with a regime-switching overlay. The median lands at $98.86 and 68% of paths finish above spot. The variance decomposition shows the p/e multiple is the dominant swing factor (60% of variance). Value is a multiple bet: fundamentals move the answer far less than the rating does.

DCF — the cash-flow anchor

Independent of the market multiple: a 5-year path, WACC 8.0%, 21.0x terminal FCF multiple → $78.87. This anchor is deliberately the heaviest (47%): it is the valuation least hostage to the current multiple regime.

Peer benchmarking — relative value

Against the peer cohort, re-rating to the peer-median EV/Revenue multiple implies $7.43; the peer-median forward P/E is 10.0x, but the engine carries no P/E-implied price for this name (no forward-EPS basis at the peer step). A premium is only justified by superior growth/margins; otherwise it is multiple risk. Excluded from the weighted blend — shown only as a market cross-check.

Across all anchors the spread is 104% of the median — wide (genuine disagreement — the blend carries low valuation confidence).

Sensitivity

DCF/share — WACC × terminal multiple

DCF/share — revenue CAGR Δ × op-margin Δ

Tornado — DCF/share swing by driver (widest first)

Company lever — SoP/share vs Recurring Business Services multiple (AI re-rating) (base 25.0x)

Peer Quality & Weighting

Quality-weighted forward P/E: 13.7× (simple median 10.0×). Direct peers count 100%, segment 50%, broad 25%.

Historical-range cross-check: 52-week range $81.79–$119, centre $98.60 (+20% vs spot); spot sits at the 0th percentile of the range. Low-weight mean-reversion cross-check, not a fundamental anchor.

Risk / Reward & Margin of Safety

Reward/risk compares triangulated upside against the probability-weighted bear target, not the extreme tail. Bull case (Bull — Defensive Re-Rate): $172.

Company Overview & Business Model

RB Global Inc. — INDUSTRIALS · SPECIALTY BUSINESS SERVICES. Business description withheld — the description on file does not name this company; reported for correction rather than published under the wrong name.

How it makes money.

Edge. Narrow moat — inferred from a 22% operating margin and the commercial & environmental services business model. Some pricing power / share stability; terminal multiple near the market.

Revenue-Segment Breakdown

The company-specific drivers behind the valuation — each segment carries its own growth, margin, multiple and capex intensity. (Tags: FACT reported · ESTIMATE from disclosures · INFERENCE judgment.)

Named Exposures

Demand & pricing cycle (FACT/ESTIMATE)

Capital intensity & shareholder returns (ESTIMATE)

Structural risk vs optionality (INFERENCE)

Industry Context — Industrials — Services

This name sits in the Industrials — Services cluster as a recurring business services name. recurring B2B services (waste / uniforms / pest / facilities) + pricing + tuck-in M&A. Its scenarios are not guessed in isolation — they inherit a single, shared view of the cluster's driver cycle, so the names that depend on the same event are mutually consistent.

Value chain: RBA (recurring business services) · ULS (professional & data services) · CLH (recurring business services) · TRU (professional & data services) · CACI (recurring business services) · BAH (professional & data services) · PCTY (professional & data services) · G (professional & data services) · BCO (recurring business services) · SAIC (recurring business services) · FCN (professional & data services) · KBR (recurring business services) · EXLS (professional & data services) · LOPE (recurring business services) · MMS (professional & data services) · EXPO (professional & data services)

Mapping note: name-level 'Structural — Pricing / Competition Reset' (20%) + 'Volume / Recession Pressure' (17%) map to cluster Pricing / AI-Disintermediation Reset (37%); name-level 'Growth — Share / New-Service Expansion' (20%) + 'Bull — Defensive Re-Rate' (8%) map to cluster Upside — Share / New-Service Expansion (28%) — the cluster row is the SUM of the mapped scenario probabilities, not a different estimate.

On the cluster's key downside — Pricing / AI-Disintermediation Reset — this name implies 37% vs the cluster house view of 37% (in line with the house). The cluster's full cross-stock reconciliation governs that the names which ride the same capex cycle assign it comparable odds.

Structure: Shared State — The Industrials — Services cycle is the shared macro driver. Driver — recurring B2B services (waste/uniforms/data/payroll) + pricing + AI-disruption debate. Dispersion — Members differ by cyclicality (quality compounders vs deep cyclicals).

Balance Sheet & Liquidity

Balance-sheet data as of 2025-12-31 (Alpha Vantage).

Capital Allocation

Free-Cash-Flow Quality

Accounting quality: SBC 1% of revenue; cash conversion (OCF/NI) 231% — cash-backed.

Earnings-Call Disconfirmation & Sentiment

Derived signals from the MCH market-data store (Alpha Vantage transcripts + news). Quantitative tone only — a disconfirmation flag, not a substitute for reading the call.

Management vs analyst tone (2026Q1): management +0.15 vs analyst floor +0.00 → delta +0.15 (n=32 mgmt / 23 Q&A; 5th pctile across the S&P book, z -1.6).

Flag: CANDID — management unusually candid/cautious vs peers (relatively low spin).

News (last 365d, 360 articles): avg ticker sentiment +0.21 (bullish 35% / bearish 1%)

Consensus & Market Expectations

_Consensus figures: Alpha Vantage sell-side aggregates. Where the house view sits materially above or below the street, the divergence is itself a datum — see the thesis.

Forecast Track Record

• EPS surprise: beat 100% of the last 8 quarters; average surprise +14.6%.
• Prior-forecast backtest (19 snapshots, 2026-07-21→2026-09-03): directional hit-rate 21%; mean predicted +17.1% vs realised -12.8%. Disconfirming track record is reported, not suppressed.

Catalyst Timeline

4 catalysts in the next 90 days (of 12 tracked). Importance 1–3; confidence 0–1.

_Sources: extended.catalysts, data/catalysts/.json, data/catalysts/macro.json, AV DIVIDENDS, opex 3rd-Friday calc.

Scenario Macro & Key Risks

Decision Rules (Machine-Checked)

Stance: Hold — 1 bullish / 1 bearish / 0 caution rules triggered of 6 evaluable (0 lacked data).

Machine-checked rules over disclosed inputs. The authored falsification triggers elsewhere in this report are analyst judgment and are NOT evaluated here. The stance is a portfolio-management signal and does not modify the published research rating.

Reasons the Thesis Could Fail (Falsifiable)

Pre-registered signals that would break the thesis — each polices a specific scenario boundary and is checked at every earnings update:

• Organic revenue growth / order backlog < flat-to-negative for two consecutive quarters (2 consecutive prints). Sustained demand rollover breaks the base case toward the recession scenario.
• FY revenue ($B) < 4.85 (next reported fiscal year). (rationale withheld pending re-authoring — frozen figure or verdict)
• Probability-weighted fair value (PWEV) at the next re-run < 81.88 (any scheduled re-run). (rationale withheld pending re-authoring — frozen figure or verdict)

Fact / Inference / Speculation

• FACT: Spot $81.88; 52-week range $81.79–$119; engine rating BUY; house target $110 (+34%). (source: Alpha Vantage 2026-09-08, 9 September 2026)
• INFERENCE: Triangulated FV $93.24 (+14% vs spot · triangulated FV); the rating tracks the Monte-Carlo + scenario-PWEV core; the cash-flow anchor sits below the multiple-discipline core.
• SPECULATION: At current prices the embedded bet is that the market keeps paying the current multiple through the capex cycle — a regime call the engine cannot verify from fundamentals alone.

Conviction Score

Research Conviction measures the strength and quality of the research setup — input coverage, financial quality, valuation support, process agreement. It is NOT the probability that the recommendation succeeds; the forecast track record section is the evidence on that.

60.6/100 (confidence band 48.7–72.6), 64th percentile of 893 covered names (as of 2026-09-08). Weighted composite under config ros-1.20.0 — every component and its inputs below.

Score history: 59.2 → 59.3 → 59.9 → 60.4 → 60.5 → 60.4 → 60.6 → 60.9.

Probability-Weighted Return Profile

Horizon: 1 year — at this horizon CAGR equals total return by definition. Expected values are the probability-weighted sums over the full scenario set below.

The gross expected return is the probability-weighted scenario return (it reconciles to the gross PWEV); the diluted figure applies the SBC share-count charge and matches the published PWEV-based target.

Expected Alpha

Expected return minus the return this name is REQUIRED to deliver for its risk (1-year horizon). Constants are pre-registered (preregistered-static (amendment #2, 2026-07-29); not fitted to MCH outcomes).

A negative expected alpha does not change the rating — it says the expected return does not clear the risk-adjusted hurdle at today's price. Rating mechanics are unchanged by this section.

Probability Cross-Checks

Not authoritative. The scenario probabilities in this report are AUTHORED — a judgement about how the world might go, not a measurement. Nothing below modifies them, the target, the rating or any position size. These checks ask only whether anything outside our own model agrees with us; where it does not, that is information for the reader, not a correction we have quietly applied.

Authored set: 5 scenarios, probabilities summing to 1.0, mean target $110.0.

Factor Exposures

Cross-sectional percentiles over 893 covered names (style scores sector-demeaned; thematic = return-beta to the theme's proxy ETF). 50 = estate median.

Market interaction: correlation vs SPY +0.39, vs QQQ +0.32 (trailing ~1y daily returns).

Options Intelligence

Preferred structure: Call Debit Spread. The selector reads the equity view (direction) and the volatility surface — nothing here re-prices the chain.

• bullish with cheap options — buy defined-risk upside; a debit spread caps cost vs an outright call
• Direction bullish from the overlay conviction/rating (read-only input).
• IV/RV at the 7th percentile of the cross-section → low vol bucket. This is the measure that selects the structure above: it ranks how rich this name's implied vol is against its own realised vol, relative to other names.
• Reported alongside and not used to select: this name's own ATM IV sits at the 75th percentile of its own month-end history (decile 8). The two measures disagree here — vol is high for this name by its own history while its options are not unusually rich against its realised vol. Where they diverge, the cross-sectional measure is the one acting.
• IV term structure is in backwardation (near-dated richer, slope -2.9pp) — front-month premium is elevated; favour selling the near tenor / shorter-dated structures.

IV term structure (backwardation, slope -2.9pp): 38-DTE 36% · 101-DTE 34% · 192-DTE 33%

Economics copied verbatim from the options overlay (priced from the listed chain (EOD marks)); the selector does not re-price.

Alternatives: LEAPS, Long Stock. IV rank shown via the name's own monthly IV history (advisory); structure selected on the cross-sectional IV/RV percentile. Model output for research and education only — not individualised investment advice. Position-sizing and stance figures are mechanical outputs of the disclosed rules and inputs; they do not consider any person's objectives, financial situation, or tax status.

Position Sizing Framework

Model output for research and education only — not individualised investment advice. Position-sizing and stance figures are mechanical outputs of the disclosed rules and inputs; they do not consider any person's objectives, financial situation, or tax status.

Options Overlay

A defined-risk way to express the BUY equity view. Chain as of 2026-09-08 — end-of-day marks — indicative, not executable quotes.

Market signals — ATM IV 35.6% (subdued regime) · expected move ±9.3% (2026-10-16) · put/call OI 0.36 · ATM Δ 0.51 / Θ -0.06 / ν 0.10. Direction: LONG (implied return +13.9% to triangulated fair value $93.24).

Bull Call Spread (Bullish) — Long 82.5 C / Short 95 C · 2027-03-19 · net debit $4.22 · max profit $8.28 · breakeven $86.72 · RoR 196.0% · max loss $4.22 · priced from the listed chain (EOD marks)

Defined-cost leverage to the fair-value gap: the debit is the entire downside, in exchange for participation between the strikes — directional exposure at a fraction of the outright call premium. Subdued implied volatility currently lowers the premium paid. Illustrative — no outcome is implied or guaranteed.

Long Call (LEAPS) (Bullish) — Long 82.5 C · 2027-03-19 · premium $8.2 · breakeven $90.70 · max loss $8.20 · priced from the listed chain (EOD marks)

Pure defined-risk directional exposure — the premium is the whole downside while the full upside is retained. A capped, known cost as an alternative to owning the shares outright.

Put Spread (income) (Bullish / income) — Short 75 P / Long 70 P · 2026-10-16 · net $0.99 · net entry $74.01 · yield 1.3% · RoR 25.0% · max loss $4.01 · priced from the listed chain (EOD marks)

Gets paid to wait for a lower entry, with the tail capped: the sold put collects premium while the cheaper long wing below it caps the maximum loss at the spread width — a defined-risk alternative to a naked cash-secured put.

Indicative options structures — a defined-risk expression of the equity view, model-and-market illustrated from the last-close chain. NOT personalised advice or an executable quote; premiums, IV and greeks move intraday. Options carry the risk of total loss of premium. Not a registered financial adviser.

Rating Bridge

Rating = BUY because:

• Probability-weighted scenario value implies +34% vs spot
• Monte Carlo median implies +21% vs spot
• DCF fair value implies -4% vs spot
• Bear case (Structural — Pricing / Competition Reset) downside is -32% vs spot
• Net: reward/risk of 0.4× supports a Buy — note this is below 1.0×, i.e. the modelled downside exceeds the modelled upside despite the Buy rating.

Model Appendix

DCF — line items

FCF is bridged: NOPAT + D&A − Capex − ΔNWC (capex intensity 10% of revenue, weighted from the segments) — not a single conversion fudge.

WACC 8.0% · Σ PV(FCF) $4B + PV(terminal) $15B = EV $18B; − net debt $3.4B → equity $15B ÷ diluted shares $0.19B = $78.87/share (exit-multiple terminal).

• Gordon terminal at 2.5% → $70.19/share — a genuinely non-multiple, cash-based cross-check; the exit-multiple and Gordon values bracket the terminal-value risk.
• Incremental ROIC on the forecast capex ≈ 8% vs WACC 8.0% → below WACC — the incremental build is value-dilutive.

Peer set

Implied prices at the peer medians: EV/Rev → $7.43 (no P/E-implied price — no forward-EPS basis at the peer step).

Weighted fair-value math

Assumption Register

Sensitivity-ranked drivers (widest fair-value swing first): Op margin ±3pp (26.0); Terminal × ±15% (23.0); Revenue CAGR ±3pp (19.0); Capex intensity ±15% (17.0); WACC ±1pp (8.0).

Inputs, Sources & Confidence

Every load-bearing input, labelled by type and confidence. (reported fact · company guidance · consensus estimate · market data · house estimate · inference.)

Research Provenance

Load-Bearing Assumptions

DCF: WACC 8.0%, terminal multiple 21×, FY+5 revenue $6B. Triangulation leans 47% on DCF, 33% on PWEV, 20% on the Monte Carlo median.