Ashtead builds on last year’s results but shares dip

Ashtead builds on last year’s results but shares dip

Despite consistent progress across its financial performance indices, industrial equipment rental company Ashtead Group plc (LON: AHT) shares couldn’t emulate that success during trading on Tuesday.

The Group’s revenue bounced 17% on a year-on-year basis fro the first half, to £1.27 billion, led by a 16% jump in rental revenue. This led a growth of 14% to an EBITDA of £626.6 million, and an on-year rise of 11% in operating profit, up to £358.3 million.

The Group’s shareholders enjoyed similar success, with EPS up 12% on both an underlying and statutory basis, to 51.4p and 49.1p respectively.

Ashtead Group commented

Chief executive, Brendan Horgan, stated,

“Our North American end markets remain strong and we continue to execute well on our strategy of organic growth supplemented by targeted bolt-on acquisitions.  We invested £521m in capital and a further £196m on bolt-on acquisitions in the period, which has added 27 locations across the Group.  This investment reflects the structural growth opportunity that we continue to see in the business as we broaden our product offering, geographic reach and end markets, thus increasing market share and diversifying our business.”

“We remain focused on responsible growth.  Our increasing scale and strong margins are delivering good earnings growth and significant free cash flow generation.  This provides significant operational and financial flexibility, enabling us to invest in the long-term structural growth opportunity and enhance returns to shareholders, while maintaining leverage within our target range of 1.9 to 2.4 times net debt to EBITDA (1.5 to 2.0 times excluding IFRS 16).  We spent £125m under our share buyback programme in the quarter, and expect to spend a minimum of £500m on share buybacks in 2019/20.”

“Our business continues to perform well in supportive end markets. Accordingly we expect business performance in line with our expectations and the Board continues to look to the medium term with confidence.”

Investor notes

After a slight recovery, the Company’s shares are down 1.53% or 35.00p to 2,252.00p per share 10/09/19 15:51 BST. Analysts from Peel Hunt reiterated their ‘Buy’ stance on Ashtead Group stock. The Group’s p/e ratio is 13.13, their dividend yield is modest at 1.78%.

Elsewhere in building and development news, there have been updates from; Alumasc Group plc (LON: ALU), Somero Enterprises Inc (LON: SOM), Barratt Developments Plc (LON: BDEV), Wincanton plc (LON: WIN) and Travis Perkins Plc (LON: TPK).