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Ashtead: Shareholders clean up, yet again

Shares in equipment rental group Ashtead are top of the blue-chip tree this morning, trading fresh record highs after a host of good news. Q2/H1 underlying revenues and profits grew >20% and included margin expansion, helped by much hurricane clean-up and a weaker GBP. This means management now expects FY results ahead of prior expectations – upgraded guidance, always welcome – even if Hurricane-flattered activity levels are likely to normalise in H2. Further internal votes of confidence come by way of a supportive 18-month share buyback programme of between £500m and £1bn (5-10% of market cap) and a 16% hike to the Q2 interim dividend, both of which shareholders are embracing.

Even the Chairman’s retirement next year isn’t being seen as a worry for investors, despite having held the position since 2007 when the shares traded around 160p, overseeing a meteoric 13-fold rise to trade just shy of £21 today. He is evidently seen leaving the group in safe hands, including the internal promotion of new COO who has twenty years’ experience at the group’s North American construction and industrial equipment rental division, the last seven as CEO and group board member.

This morning’s gap higher to fresh highs shows shareholders still have faith in Ashtead’s combination of solid end markets, a strong balance sheet and quality execution.

Mike van Dulken, Head of Research, 12 Dec 2017

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

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