"When it comes to investing in growth stocks, there are two types of investor. There are those relaxed about paying high prices for the promise of rapid growth. And there are those who hate the idea of overpaying and think a reasonable valuation ..."
Ashtead continues to push new highs, 2000p a far cry from the dire warnings of Deutsche Bank analysts in 2016 give sub 600p targets and the 6% of stock which was sold short. I have sliced a few (which is my normal approach, looking to buy back lower in any dip).
It would be reasonable to question if the SP is getting ahead of itself at this level, there have been significant upgrades on the consensus 2018 EPS in the last month, from 124p to 144p according to 4-Traders. Of course these estimates fluctuate and can be driven by one analyst getting a sugar high, but that is a big jump.
The dollar seems to be recovering which will help.
US Economy still doing well, driven by tax cuts, repatriated cash increasing investment
The timing and size of promised infrastructure work seems unclear, relying heavily on
Oil price is getting US frackers back on the job, not such a big part of AHT business but
are probably positioning to take more of a cut.
Happy to still hold a fair chunk, good luck to AHT holders.
Agree with your observations and also (still) my best single investment. The read across in the US has seen a significant move in URI too - currently up 1.2%! The trap door would open here if URI dropped 6% in a day.
A few moving parts in the results such as a benefit from the US tax changes with 399m of exceptional tax benefit, tax rate down from 34 to 31% is an ongoing benefit, presumably with more to come when full period is at lower rate.
PE at ~16 for FY, great growth record and more likely to come with infrastructure spend and US growth. Even A-Plant is performing well, albeit the tail on a pretty big Sunbelt dog.
AHT remains my best single investment, I was happy to add some back at 1923p having sold a few in Dec and Jan.
Will continue to hold what has been an excellent investment over the last few years but disappointed that the excellent results and outlook for cash flow etc have in my opinion been over shadowed by the size of these sales.
I think you are right, Stockmarketwire reported Equipment rental company Ashtead (AHT) fell 3% to £19.99 after chief executive Geoff Drabble sold 941,940 shares in the business. Other members of Ashtead's board also took profit by selling shares.
Thats 70% of his holding and over 19m GBP, quite a sell.
Citigroup downgrade from buy to neutral, they had a target price of 2000p which was met, no new target. On Wednesday Numis reaffirmed its buy investment rating and set its price target at 2500p (from 2000p).
Digital Look is showing forecasts as strongly positive, but will be interesting to watch in coming weeks. Strong Buy 14, Buy 1, Neutral 5, Sell 0, Strong Sell 1
Never wrong to take a profit but I'll hold for now.
Pretty hefty director sells yesterday and a downgrade from buy to neutral really hasn't helped AHT's SP this morning. Been a successful investment for me over the last 3 or 4 years, perhaps the time is coming when I sell up, realize the profits and look at new prospects.
Bit of a weird dip this morning, maybe worries about election in Alabama reducing the Republican majority and undermining some of the Trump themes, Tax cut, infrastructure and the wall. I think that the Q2 results showed AHT can do very well with or without Trump's blundering.
Happy to buy back a chunk this morning having sliced a few yesterday (which pretty much why I typically slice profits, even on solid buy and hold shares like AHT).
On the buyback, I'd be happier to see AHT finding ways to profitably expand the business, but the board have been criticised for "smoke and mirrors accounting", with the true performance concealed by acquisitions. I think the results over last few years have put that to rest, but maybe board are wary about going too far and want to keep the city quiet with buybacks.
I'm happy holding, this has been my best performing share over the long term.
<b>Records and upgrades follow Ashtead's results
By Graeme Evans | Tue, 12th December 2017 - 13:05</b>
As much as Ashtead (AHT) boss Geoff Drabble tries to downplay the "Trump card", there's no denying that the US president has been a boon for shares in the equipment rental company. They rose as much as 5% Tuesday to a fresh record high and some believe they could go further still.
Up more than 70% since Donald Trump's election to the White House, the FTSE 100 (UKX) stock was given fresh impetus today after Drabble forecast better-than-expected annual results and made a surprise pledge of up to £1 billion in share buy-backs over the next 18 months.
Trading momentum remains strong, particularly in the United States where Ashtead generates nearly 90% of trade through its Sunbelt division. Rental-only revenue growth for Sunbelt was 18% in the quarter to October 31 as group revenue lifted 22% to £945 million and profits rose 24% to £298 million.
Ashtead's role in clean-up efforts following hurricanes Harvey, Irma and Maria helped the performance, but Drabble is keen to stress that the factors behind the US growth story are as much structural as they are cyclical or due to one-offs.
Recent excitement in the City about Ashtead stems from Trump's US tax reforms, which will mean a lower group tax rate of 23-25% as well as a one-off, non-cash tax credit of about £400 million relating to deferred tax liabilities.
While Ashtead cautioned that the full benefit may not be fully realised until 2019/20, analysts at Investec Securities have said that a 23% effective tax rate could increase its estimates of full-year 2019 earnings per share (EPS) by 17%.
On Trump's infrastructure spending plans, Drabble said earlier this year that this was little more than a long-term advantage for Ashtead.
Ashtead has a five-year plan to grow its North American business and is only 18 months into the journey. Sunbelt is now the second-largest US rental equipment business, with almost 650 outlets. In 2014, Sunbelt entered the Canadian market where it is gradually building a presence and network of stores.
In the UK, Ashtead's A-Plant business continues to perform well and delivered rental only revenues of £182 million in the quarter to October 31, up 20% on the prior year.
With shares up 28% since the US hurricanes hit, UBS analysts said the strong quarterly performance and US tax cut were mostly factored into the share price, although they said that today's significant share buy-back was unexpected.
Barclays moved its target price to 2,263p from 1,867p following today's update, even though Ashtead has been the strongest performer in the UK support services sector by some distance over the past three months.
"As much as LSE:AHT:Ashtead boss Geoff Drabble tries to downplay theÂ "Trump card", there's no denying that the US president has been a boon for shares in the equipment rental company. They rose as much as 5% Tuesday to a fresh record high and some ..."
"Warren Buffett is a huge inspiration to many investors. And while it's easy to see why his multi-billion-dollar fortune is enviable, a big part of the appeal is Buffet's consistent common-sense approach to the stockmarket. His attitude to buying ..."
Interesting that they are happy to report revenue growth pre acquisition and greenfield in Sunbelt but not in A Plant.
A Plant revenues plus 21% but lot of acquisition revenue included in that - Hewden, Plantfinder, Lion trackhire, Mather and Stuart, Wates - are underlying revenues growing or are they reducing as the UK market softens. Can this be seen anywhere in there documentation?
"I am delighted to be able to report another strong quarter for Ashtead with Group rental revenue increasing 25% and underlying pre-tax profit increasing by 30% to £238m. The reported results were impacted favourably by weaker sterling but, with 17% growth in Group rental revenue at constant exchange rates, we have continuing good momentum.
At the end of the quarter both businesses were performing well, in line with expectations and with positive momentum. Hurricane season has already generated significant activity which will require a major clean-up effort and then a multi-year rebuild programme. Currently, our efforts are focussed on supporting our colleagues, neighbours and customers and we stand ready to provide further assistance. It is too early to attempt to quantify the impact of Hurricanes Harvey and Irma accurately on our business. However, it is evident that it will result in an increase in demand for our fleet and we will provide an update at the end of Q2. Looking forward, as a minimum, we expect that the impact will help to underpin the current market assumptions in our 2021 plan and therefore the Board continues to look to the medium term with confidence."
AHT has had a good few days, the CRS acquisition yesterday and as mentioned the UR results along with strength in US market.
The market liked the CRS buy but given the importance of energy to the Canadian plant market I would have thought there may be some risk. That said AHT have a great record of adding value through acquisition.
Took a very small slice of profit this morning as I usually do when it is on offer. Still holding at 4.5%
Ashtead's Sunbelt Rentals to acquire CRS
By StockMarketWire | Wed, 19th July 2017 - 08:04
Ashtead's North American business, Sunbelt Rentals, has ageed to acquire CRS Contractors Rental Supply for an initial cash consideration of C$275m with an additional earn out of up to C$20m depending on future performance.
CRS is a leading provider of rental equipment in Ontario, Canada employing over 400 people across 28 locations.
The acquisition, which is subject to certain regulatory approvals, is expected to complete in the next few weeks.
Ashtead chief executive Geoff Drabble said: "This acquisition is a significant next step in developing Sunbelt's position in Canada and our first move into the important Ontario market.
"I look forward to welcoming all of the CRS employees who will be joining Sunbelt as part of the acquisition and to working with them to deliver on the major opportunities ahead."
At 8:04am: (LON:AHT) Ashtead Group PLC share price was +16p at 1647p
AHT Ashtead...........Broker comment from Hargreaves landsdown........
<b><u>HL COMMENT (13 JUNE 2017)</b></u>
Revenues at construction equipment lessor Ashtead rose 11% in the final quarter to £717.4m, helping to generate operating profits of £216.6m. Full year rental revenues rose by 13% at constant exchange rates (CER) to £2.3bn, with operating profits up 7%.
<b>The board has announced a final dividend of 22.75p per share, taking the full year payment to 27.5p, a 22% increase on the prior year.</b>
The shares were broadly flat following the announcement.
With almost 90% of revenue generated in the US, weaker sterling and the prospect of increased infrastructure spending under Donald Trump reinforced a stellar performance at the end of last year.
The shares have come off the boil a bit since, following concerns that the embattled US administration won't be able to deliver the spending splurge it initially planned. But Ashtead management remains upbeat, and continue to invest for growth.
The group is targeting double-digit revenue growth through to 2021 and is supporting that with investment in organic growth, acquisitions and new store openings. Already Ashtead is befitting from a strong economic recovery in the US, along with a trend for US firms to rent rather than buy construction equipment.
Equipment rental is a fragmented industry, and investing to seize market share seems like a sensible move. However, the markets Ashtead services are notoriously cyclical and in the past the group hasn't been very good at managing that. Ashtead went into the financial crisis laden with debt after splashing $1 billion on acquiring another US rental firm just before the crash. When construction markets dried up, the share price fell by more than 85%.
We will be keeping a sharp eye on debt in the years ahead, but at the moment the group seems to be exercising a sensible degree of caution. Assuming replacement capex remains low, the group should generate significant free cash flow over the next few years.
At present Ashtead is prioritising reinvestment of that cash over returning it to shareholders. Still, with <b>the dividend up 22% this year</b>, it's unlikely shareholders will be feeling too neglected. Analysts are forecasting a prospective yield of 1.8% for 2017/18.
However, it's also worth noting that on a price to book basis (a more conservative method of valuing capital-intensive industries) the shares trade on multiple of 5.6 times - well above the long term average of 4.1 times book value .
<b>Full Year Results</b>
The US (Sunbelt) and UK (A-Plant) divisions both reported robust full year total revenue growth, up 27% and 15% to £2.8bn and £418m respectively. Operating profits from the two divisions were £840.9m and £71.6m.
Growth in Sunbelt combined organic same store growth, with average fleet on rent for the year hitting 71%, bolt-on acquisitions and new store openings. A-Plant also benefitted from an increase in fleet on rent, although there has been some weakness in pricing in Sunbelt's North American business.
Total revenue was negatively affected by lower used equipment sales, reflecting lower replacement capital expenditure. Average fleet age is now 29 months (2015/16: 25 months).
2016/17 saw margins stall slightly, reflecting drag from new openings, including 73 new stores in North America. However, cash generation has improved significantly, with free cash flow of £319m (2015/16: -£68m).
Total capital expenditure for the year was £917m (net of disposal proceeds), with 15 bolt-on acquisitions worth £437m. The group expects a similar level of capital expenditure in 2017/18. Net debt currently stands at £2.5bn, up c. £500m on last year. Net debt to EBITDA (earnings before interest, tax, depreciation and amortisation) remains unchanged at 1.7 times, in the middle of the group's 1.5-2 times target range.
<b>Current conditions remain good and Spring has re
I expect these shoud show continued support from relatively positive environments in the US (and of late in UK with strongest Construction data for a couple of years recently announced). The main story in the last year has be weak sterling and despite some recent strength sterling at 1.26-1.30 will continue to support revenue and profit from US.
US political situation seems to have settled into a state of perpetual chaos and this may get in the way of some of the much vaunted infrastructure spend but then was it ever more than slogan? That said the business was doing just fine without any exceptional stimulus (well ignoring the odd trillion in quantitative easing etc).
I sliced some profit as the SP rose through to March although bought a few back in after the drop, now down to a holding under 5%. I note that the broker consensus forecasts (on DL) have been increased significantly since last year. These earnings if realized would support a much higher SP than current, but brokers, even a flock of brokers, have been known to get it wrong.
EPS p Oct 16 Jun17
2017 98.66 104.31
2018 109.67 120.54
2019 - 131.65
Just sold half of my holding for two reasons ... the AHT counted for almost two thirds of the value of my portfolio so needed rebalancing.
As stated in earlier posts on this notice board, I've been waiting for the inevitable 'voices of impeachment' to change from being rumour and whisper to something more substantial ... i think that moment has arrived.
Even if he doesn't get impeached .. i think its going to be a little bumpy until the matter is resolved one way or another.
This does seem to correlate highly with Trump mentioning his promised US infrastructure spending spree.
I got out a tad early at 1600 ish recently because i felt that any investment strategy that relied on anything coming out of Trumps mouth is probably flawed!
I'll keep my eye out for a re entry point tho...
"Markets held their breath Tuesday as Donald Trump warmed up for his inaugural speech to politicians in Congress. While he failed to flesh out key election promises on infrastructure spending, tax cuts and deregulation, the president did give an ..."
"Sales of spades and shovels will go through the roof if Donald Trump's masterplan for increased infrastructure spend gets the thumbs up from Congress. We'll find out in two weeks' time. If things work out, a number of British firms stand to ..."
Impetus remains strong this morning. Ashtead, along with my engineers is motoring upwards. Like all good things there will be an end to this but quite where or when is anybody's guess. I will keep a keen eye on activity over the pond for impending weakness and move (hopefully)close to the top - which could be anywhere above £20!
AHT continues to defy gravity, touching 1700p as I speak. Having risen 105% since this time last year (admittedly a low point), one wonders when it will take a breather, it would seem due. I noticed a gap up today, maybe that will be signal of a dip, who knows.
Anyway, despite selling many slices, this remains a good chunk of my holdings and will remain so and I will be buying into any significant weakness.
Now through the 1700 barrier at 1703 so maybe more to come?.
"With AHT broadly flat so far this year and URI up around 20% you have to wonder whether the value in Sunbelt would be more appreciated if it had a separate US listing"
If you look at the 5 year comparison AHT is up 533%, URI 233%, in the last 12 months URI has done a bit of catch up at 168% Vs 77%. This years URI rise was mainly driven by the results and the acquisition of NES Rentals Holdings II, Inc. for $965 million in cash.
I guess given the dominance of Sunbelt they may one day look to either migrate, sell Sunbelt or split but it ain't broke and no fix needed. I'm happy with AHT as it is, it has been my best return.
Rightly or wrongly the URI share price yesterday persuaded me that this was nothing more than a reaction to the broker downgrade. I agree with H2 and also have a problem with the reasons for the downgrade.
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