Ashtead shares were slightly lower on Tuesday after the plant hire company said they enjoyed a record first half, but earnings were flat in Q2.
Today’s update comes after a recent warning on profit due to slower activity in their film and TV business in the US.
Ashtead’s revenue for the first half of this year grew 16% to $5.6bn, up from $4.8bn in 2023. However, investors were unimpressed with profit before tax of $666m in the second quarter, little changed from the same period a year ago.
Ashtead shares were down 4% to 4,702p at the time of writing. The stock has a 52-week high of 6,012p.
“Equipment rental business Ashtead has an enviable track record of earnings and dividend growth going back more than a decade and it has posted record results yet again today,” said AJ Bell investment director Russ Mould.
“The catch is that earnings were flat in the second quarter, underlining why the company recently moved to warn on profit. Some of the reasons for this warning – notably the writers’ strike which affected demand on film and TV sets – seemed genuinely one-off in nature but there will be concerns about how robust America’s construction and infrastructure markets are right now.
“It’s little surprise that Ashtead management felt moved to flag its core US market as being robust. The company argues growth in this area has structural and legislative underpinning, though the fate of some of the big spending programmes announced by the Biden administration may start to be cast under a shadow of doubt ahead of a US Presidential election next year.
“For now, Ashtead’s scale and know-how in a market which remains highly fragmented should be enough to help it shake off its recent woes.”
Equity analysts at Hargreaves Lansdown also shared the long-term positive view on Ashtead and pointed to their strategy update next year as a potential catalyst for shares.
“The North American market is key, with mega projects off the bank of recent legislation being Ashtead’s bread and butter. Its scale and expertise are a winning formula in a fragmented industry,” said Matt Britzman, equity analyst, Hargreaves Lansdown.
“There’s still a general feeling of positivity around the group, and next year’s strategy update should be the next major catalyst for movement in the valuation.”