Ashtead shares rise as it raises annual guidance

US business performed especially well as the company invests in growth.

Article updated: 11 December 2018 11:00am Author: Ian Forrest

  • The group saw revenue climb past the £1bn mark in its latest quarter thanks to a boost from US Sunbelt business.
  • Investors should be pleased by the 18% rise in the interim dividend.
  • We continue to recommend Ashtead as a ‘buy’ for investors seeking a medium-risk growth portfolio.

Equipment hire group Ashtead comfortably beat market expectations with its second quarter results today, and said it now expected full year figures to be better than previously forecast. The company reported a 17% rise in underlying rental revenue to £1.1bn with a 16% increase in pre-tax profit to £347.8m. The business in the US, which provides most of the revenue, performed especially well with a 16% rise in organic revenue and that contributed to an 18% increase in revenue for the first half as a whole. There was a 26% rise in net debt but the company continues to invest in new equipment as it sees further opportunities to grow.

These figures are good news for investors as they show the good trading momentum in the first quarter has continued and the company seems confident of it continuing into the second half of the year, the interim dividend was also raised by 18%. The market responded positively with a 7% rise in the shares in early trading.

We continue to recommend Ashtead as a 'buy' due to the strong earnings momentum it has developed, the potential for further improvement in cash flow and the fact that the current CEO Geoff Drabble is due to hand over to the head of the North American operation, Brendan Horgan.


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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.