ii view: Ashtead shares popular after meeting City estimates
A share price which has more than doubled over the last five years and with its primary stock market listing due to shift to the USA in early 2026. Buy, sell, or hold?
3rd September 2025 15:10
by Keith Bowman from interactive investor
First-quarter results to 31 July
- Total revenues down 2% to $2.8 billion
- Rental revenues up 2.4%
- Adjusted pre-tax profit down 4% to $552 million.
- Net debt down 5% to $10.3 billion
Guidance:
- Continues to expect year ahead (2026) rental revenue growth of 0-4%
- Now expects annual free cashflow of $2.2-2.5 billion, up from a previous $2-2.3 billion
Chief executive Brendan Horgan said:
“The Group delivered solid first quarter results with revenues, profits and free cash flow in line with our expectations as we continue to take advantage of secular tailwinds and the structural progression of our industry.”
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ii round-up:
Ashtead Group (LSE:AHT) today reported an acceleration in rental demand, with the equipment hire company flagging increased mega project activity and positive lead indicators for local non-residential construction activity.
Growth in first-quarter rental revenue of 2.4% was better than the previous quarter’s 0.9%, with the soon to be primary US stock market listed company continuing to forecast year ahead growth of up to 4%.
Adjusted pre-tax profit for the quarter matched City estimates, declining 4% to $552 million from a year ago, hindered by increased costs and reduced profitability at its UK operations.
Shares in the FTSE 100 company rose 2% in UK trading having come into this latest news up by close to a tenth so far in 2025. That’s similar to the blue-chip index itself. UK focused Speedy Hire (LSE:SDY) is down by a similar amount over that time.
Ashtead rents out a full range of construction, industrial, lighting and emergency power generating equipment via its Sunbelt brand in the US, Canada and UK.
North American revenues for Specialty equipment rose 5% during the quarter, up from a gain of 4% the previous quarter. General tool revenues for the region rose 1% from a flat outcome in Q4.
North America accounted for 92% of last year’s sales and 98% of profits, with Ashtead’s primary stock market listing scheduled to move the USA in March 2026.
Changes in US tax laws regarding depreciation allowances now see Ashtead forecasting free cashflow for the current 2026 full year of $2.2-2.5 billion, up from a previous $2.0-2.3 billion.
Management continues to forecast growth in full year 2026 rental revenues of up to 4%. Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results.
ii view:
Started in Ashtead, Surrey in 1947, the company today rents out more than one million items of equipment to over 900,000 different customers. Under categories General or Speciality, items of equipment that can be rented include aerial platforms, air compressors, heaters, lighting, water pumps and crowd control barriers.
For investors, ongoing economic outlook uncertainty in the group’s biggest market, North America, is not to be overlooked. Events outside of management’s control such as strikes, customer bankruptcies and even the weather given group services to help in the aftermath of hurricanes, warrant consideration. A forecast price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap, while elevated US government debt could at some point see expenditure on mega projects reduced.
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More favourably, rental revenue growth of 2.4% is up from +0.9% and +1% in the two previous quarters, with management flagging early signs of growth in local non-residential construction activity. Demand for mega projects remains robust. Bolt-on acquisitions totalled $20 million in this latest quarter and continue to assist growth, while the dividend payment has been increased for more than 10 consecutive years, leaving the shares on a forecast dividend yield of around 1.5%.
In all, and despite ongoing risks, this giant of the hiring world continues to justify its place in many already diversified investor portfolios.
Positives:
- Product and customer diversity
- Progressive dividend payment
Negatives:
- Tough economic backdrop
- High dependency on US business
The average rating of stock market analysts:
Buy
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