Interactive Investor

ii view: hire giant Ashtead breaks records

13th June 2023 11:50

by Keith Bowman from interactive investor

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Exposure to US mega projects and expanding its North American hire location numbers. Buy, sell, or hold?


Full-year results to 30 April

  • Revenue up 24% to $9.67 billion (£7.74 billion)
  • Adjusted pre-tax profit up 26% to $2.27 billion (£1.82 billion)
  • Final dividend of $0.85
  • Total dividend for the year up 25% to $1
  • Net debt up 25% to $8.96 billion (£7.2 billion)


  • Full-year ahead guidance broadly unchanged

Chief executive Brendan Horgan said:

“This significant investment is enabling us to take advantage of the substantial structural growth opportunities that we see for the business as we deliver our strategic priorities to grow our general tool and specialty businesses and advance our clusters.

“We are in a position of strength, with the operational flexibility and financial capacity to capitalise on the opportunities arising from these strong markets and ongoing structural change. The Board looks to the future with confidence."

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ii round-up:

Rental company Ashtead Group (LSE:AHT) today detailed record annual sales and profit as it continued to invest heavily in new equipment and new outlets for customers. 

Sales jumped by a quarter to $9.67 billion, generating adjusted pre-tax profit of $2.27 billion, up by a similar amount to sales and broadly matching City forecasts. 

Shares in the FTSE 100 company fell around 1% having come into this latest news up by around 40% over the last year. Smaller rival Speedy Hire (LSE:SDY) is down by around 30% over that time, while the FTSE 100 index is up 5%.

Ashtead, which trades under the Sunbelt brand, rents a full range of construction and industrial equipment such as generators to a wide range of customers. 

Capital investment of $3.8 billion in existing and new sites was supplemented by expenditure of $1.1 billion on 50 on-bolt on acquisitions. New site openings over the year totalled 165 across its main North America market. 

A good start to the new financial year ending April 2024 and further mega construction projects, including US government backed initiatives, are expected by analysts to help adjusted pre-tax profit rise to around $2.57 billion.   

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results, with the company remaining one of its top picks.

ii view:

Started in the village of Ashtead in Surrey in 1947, the company today rents out more than 900,000 items to over 800,000 different customers. Its equipment includes aerial platforms, air compressors, heaters, and forklift trucks. The US generates most of its sales at around 85%, followed by the UK at 9%, and Canada the balance. Given its focus on the USA, the company previously switched to report its results and dividend payments in dollars.

For investors, higher borrowing costs and the relationship between interest rates, property prices and construction activity should not be forgotten. Group net debt and financing costs have risen, costs generally for businesses remain elevated, while a price-to-net asset value above the three-year average may also suggest the shares are not obviously cheap.   

On the upside, customer demand has been and remains robust. Bolt-on acquisitions continue to help increase location diversity, net debt remains within management’s comfort range, while the dividend payment has been increased for more than 15 consecutive years. 

On balance, and while a dose of caution regarding the US economy appears sensible, Ashtead is a very well run company, business is brisk and an analyst consensus estimate of fair value at over £63 per share is encouraging.


  • Ongoing bolt-on acquisitions 
  • Progressive dividend payment 


  • Tough economic backdrop
  • High dependency on US business 

The average rating of stock market analysts:


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