Is Rocky Mountain Dealerships Inc. a Buy After Q4 Results?

Rocky Mountain Dealerships Inc. (TSX:RME) is a Toronto-based company that sells, leases, and provides product and warranty support for industrial and agriculture equipment across Canada. Shares of Rocky Mountain have dropped 5.4% in 2018. The stock was up 0.46% at the bottom of the noon hour on March 16. The company released its 2017 fourth quarter and full-year results on March 14.

In the fourth quarter sales dropped 4.3% year over year to $273.4 million as used equipment sales declined by $18.5 million in the quarter. Used equipment sales were also irregularly high in Q4 2016 due to lingering harvest activity and a push by the company to reduce its inventory. Gross profit in Q4 rose 12% to $38.2 million, as a percentage of sales gross profit climbed to 14% compared to 11.9% in Q4 2016.

Rocky Mountain expects demand to pick up in 2018 as recent quarters have shown agricultural equipment supply and demand is starting to stabilize. In previous quarters a depressed Canadian dollar and high inventories had sunk demand below historical levels. Sales increased 3.1% to $959.3 million for the full-year in 2017. The stock also delivered an annual dividend of $0.46 per share representing a 3.5% dividend yield.

Canadian harvesters are expected to continue to invest harvesting profits into new equipment buys in 2018. Rocky Mountain stock has climbed 30% year over year and investors may want to take the opportunity to buy into its slight 2018 dip in the near future.