Interactive Investor

ii view: FTSE 100 hire giant Ashtead beats City forecasts

7th March 2023 11:28

by Keith Bowman from interactive investor

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Expanding its North American hire locations and sat on an enviable dividend track record. Buy, sell, or hold?

sunbelt ashtead 600.jpg

Third-quarter update to 31 January

  • Revenue up 21% to $2.43 billion (£2.02 billion)
  • Operating profit up 36% to $609 million (£505 million)
  • Net debt up 28% to $8.82 billion (£7.32 billion)


  • Expects full-year results above its previous forecasts

Chief executive Brendan Horgan said:

“We are executing well against all actionable components of our strategic growth plan, in end markets which remain strong.”

ii round-up:

Rental hire company Ashtead Group (LSE:AHT), which trades under the Sunbelt brand, today detailed quarterly results ahead of City forecasts, enabling management to upgrade full-year forecasts. 

Third-quarter sales to the end of January rose by just over a fifth to $2.43 billion (£2.02 billion) as customer demand remained robust, pushing up profit by over a third to $609 million (£505 million). Profit for the full year is now expected to come in at up to $2.25 billion compared to a previous estimate of $2.2 billion. 

Shares in the largely US focused Ashtead rose by more than 3% in UK trading having come into this latest news up by a fifth year-to-date. Shares in smaller UK and Ireland focused rival Speedy Hire (LSE:SDY) are down by around 5%, while the FTSE All Share index is up 5%. It's also notable that Ashtead has gained over two-thirds in value since June and is currently fast approaching the record high of over 6,500p set in December 2021.

Ashtead rents a full range of construction and industrial equipment to a wide array of customers. The USA accounts for around 80% of sales, the UK around 13% and Canada the balance. 

A combination of price rises, increased volumes and bolt-on acquisitions helped drive the gain in quarterly sales. Year-to-date Ashtead has spent $970 million on 38 acquisitions, adding 120 new North American hire locations and pushing net debt to $8.82 billion from $6.9 billion at the start of its financial year. 

US equipment expenditure of up to $3.3 billion in 2024 on both replacement and new additional hire equipment, is expected to drive mid-teen revenue growth, pushing City profit estimates up by around 7% to a potential $2.6 billion for the year. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results. Fourth-quarter numbers are scheduled for 13 June. 

ii view:

Started in the village of Ashtead in Surrey in 1947, the FTSE 100 company today employs more than 23,000 people. It rents out more than 900,000 items to over 800,000 different customers, with its array of items available to rent including aerial platforms, air compressors, heaters, and forklift trucks. Given its focus on the US market, it previously switched to report its results and dividend payments in US dollars from UK pounds.  

For investors, the possibility of further increases in borrowing costs and their impact on activity across the construction sector where Ashtead's equipment is regularly used, should not be forgotten. Group debt has risen, costs for businesses generally remain elevated, while a price-to-net asset value above the three-year average suggests the shares are not obviously cheap.   

That said, demand has to date remained robust, with full-year forecasts increased. Bolt-on acquisitions continue expand its location diversity, net debt remains nearer the lower end of management’s target range, while the dividend payment has been increased more than 15 years in a row. 

For now, and while some caution remains sensible, there is clearly momentum here and Ashtead is winning market share. It is a class act and a record of resilience continues to underpin longer-term confidence.  


  • Ongoing bolt-on acquisitions 
  • Progressive dividend payment 


  • Clouded economic outlook
  • High dependency on US business 

The average rating of stock market analysts:


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