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Ashtead – Strategy Execution Drives Growth

By Anna Peel. Originally published at ValueWalk.

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Ashtead Group plc (LON:AHT)’s full year revenue met expectations and rose 19% to $8.0bn, reflecting a 22% rise in rental revenue and growth across all geographies ignoring the impact of exchange rates. This was a 23% increase compared to pre-covid times.

The revenue growth fed into a 38% increase in underlying profit before tax to$1.8m. This was helped by saving efforts, although higher levels of activity meant some costs returned.

Q1 2022 hedge fund letters, conferences and more

Ashtead’s expecting rental revenue to rise 12-14%, as growth in the US and Canada offsets a decline in the UK as pandemic-related medical demand wanes.

The group spent $414m on share buybacks this year and a $0.675 final dividend was announced, bringing the total to $0.80 for the year.

The shares rose 1.2% following the announcement.

Ashtead Group’s Earnings

Laura Hoy, Equity Analyst at Hargreaves Lansdown:

“We’re pleased to see Ashtead’s been making hay while the sun shines. But the real progress has been growth in the group’s end markets. As demand from the healthcare sector starts to wane, Ashtead’s growing position in the US should continue to drive sales in the year ahead. The group’s had to open its wallet to fund the expansion, but a the balance sheet remains in reasonably strong condition. That’s despite $414m spent on share repurchases this year. Although the group’s approved further buybacks this year, management is unlikely to keep up with this level of repurchases given the pressing need for increased investment in the business. For now all appears to be well at Ashtead, and the inflationary environment’s done little to dull the shine. However with a recession still a very real concern in the group’s largest markets, construction spending could start to shrink which would undo much of this progress.”

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