Ashtead Share Discussion Threads

[2flatpack] 17/7/2017 14:05

Afternoon bracke
As always you are correct.
I would suggest the price rise from sub 30 to 1600 is down to fundamentals, long may they last or is that a technical blip.
The more I look at the fundamentals the only word that comes to mind is consistency so why does the share price fluctuate so much ? That is what I am trying to figure out.
cheers

[ianwwwhite] 17/7/2017 11:43

I see my mere mention of AHT fundamentals at the weekend has reinvigorated the share price this morning!

Now let's see what bracke can do with his charts and squiggly lines! Uh oh! Just spotted brackes earlier post, seems I'm too late!
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[discodave4] 17/7/2017 11:28

Does look a bit frisky this morning!

[ianwwwhite] 14/7/2017 17:59

Hi 2flatpack

Thanks for your comments.

When reviewing the table above it may be worth bearing in mind the relative merits of EPS v ROCE as a lead indicator.

The graph below is illuminating I think, given that company's performance:



Edit: In his 1979 letter to shareholders, Mr Buffett stated: “The primary test of managerial economic performance is the achievement of a high earnings rate on equity capital employed (without undue leverage, accounting gimmickry, etc) and not the achievement of consistent gains in earnings per share.”

I hope this is of interest, in any event, have a great weekend,

Cheers,

IW
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[2flatpack] 14/7/2017 17:23

Thanks ian.
I will give it a coat of looking at.
Not sure it will be of any use to me but may be a step on the way to the magic formula .
Not a bad week but it would have been nice to finish it off with an Ashtead Friday.
Have a good weekend.
Cheers

[ianwwwhite] 14/7/2017 17:18

Hi Lairddavid

Lol!

I would welcome Fenner's contribution, he is generally acknowledged as our quantitative analysis expert!
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[lairddavid] 14/7/2017 17:13

Oh Oh!!! Fenner will be on shortly with his calculations.

[ianwwwhite] 14/7/2017 16:36

Good afternoon 2flatpack

I have had a go at combining your earlier EPS and Share Price figures with a simple Return on Capital
Employed (ROCE) calculation showing the efficiency with which Capital is employed, in the following
table:



The table should be regarded as indicative only, but it is interesting to note that although 'Assets' have more
than doubled during the five years, the ROCE figure has remained reasonably constant which I take as
pretty positive, i.e more capital employed, percentage return sustained around 14%.

The basis I have used for the ROCE figure (cf Earnings/Capital Employed) is Pre-tax Profit divided by
(Assets minus Short Term Liabilities), and I would be happy to take some guidance if anyone knows
better!

EDIT: Free Cash Flow and Dividend detail added to chart.

(E&OE - DYOR)
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[discodave4] 13/7/2017 18:05

Thanks 2flat / Ian for your thoughts.Not forgetting thanks bracke - blimey can't remember the "death cross" post. Just noticed though, if it was the 19th May wasn't that the day after that massive candle wick?.DD

[ianwwwhite] 13/7/2017 18:05

HI bracke,

Glad to see that you have not returned to the 'dark side', although with the way that AHT is bouncing around the temptation must have been great!

Live to fight another day, eh?
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[ianwwwhite] 13/7/2017 17:44

Good afternoon 2flatpack

Just come in from an afternoon in the garden to find your interesting post.

As I understand it, EPS can increase if more capital is employed, but return on capital employed (ROCE) may in some cases reduce. I believe Tesco in the period <>1998 to 2011 is a case in point where EPS rose over 30%, but ROCE fell by around 9%. Terry Smith is worth reading on this. (Search 'Terry Smith Tesco' - link won't post here)

Unfortunately I haven't much time at present, but it might be interesting in due course to add ROCE to your AHT figures to see how this compares?

Just a thought!

[2flatpack] 13/7/2017 17:30

Cheers bracke

[bracke] 13/7/2017 17:08

The share price has closed above the upper trend line but resisted at the Daily SMA 50.

If the rise is to continue it now has to move up to and break above the Daily SMA 100 at approx 1625. An increase in volume would provide confidence in further upward movement.

EDIT

Following my post to-days volume has been adjusted upward to an above average level.

[bracke] 13/7/2017 15:45

ian

Yes Mrs Yellen has 'flip flopped'. I think that's the term, sort of like a 'U' turn but not quite. It's only a few weeks ago she was sounding hawkish. One has to ponder who is making the running Mrs Yellen or the market.

As for Mr Trump hardly a week goes by without a new 'revelation'.

Ref 'nasty shorters'. I did think about becoming one earlier (leopard and spots) for the gap fill but the sbet company wanted a spread of 2.63. There was only 10 points on offer minus the spread. The risk/reward did not appeal so no short.


Good day Disco

"The 50day MA crossed the 100day on the 19.05.17 and the 100 seems about to cross the 150.
As a Elite Guru do you think these death crosses or whatever they are called hold any significance ."
=================================================================================

In as much that they indicate the share price direction yes I do but I analyse the share price itself irrespective of what averages it crosses. They are useful in assessing s/r. I do find the Daily SMA 200 of particular significance.

[2flatpack] 13/7/2017 13:17

afternoon ian,
Like you I have been reviewing the last few years.
One of the things that impressed me was the consistency of the EPS growth I am trying to relate it to share price growth .
Year

[2flatpack] 13/7/2017 13:17

afternoon ian,
Like you I have been reviewing the last few years.
One of the things that impressed me was the consistency of the EPS growth I am trying to relate it to share price growth .
Year EPS growth Share price growth

16/17 23.6% 71%

15/16 34% (14.7%)

14/15 31% 27%

13/14 68% 41.5%

12/13 56% 152%

11/12 880% 39%

Hope it is of interest.
cheers

[2flatpack] 13/7/2017 13:02

Afternoon bracke
The 50day MA crossed the 100day on the 19.05.17 and the 100 seems about to cross the 150.
As a Elite Guru do you think these death crosses or whatever they are called hold any significance .
I agree with both you and ian AHT is a great investment although how long you need to hold is always the question.( normally until the next results ).
Cheers

[ianwwwhite] 13/7/2017 12:32

Good afternoon bracke,

Glad to hear we share a common view.

re general fundamentals it seems that Janet Yellen was quite dovish in yesterdays speech, and distanced herself from the prospect of multiple rate hikes in the coming months.

In the case of Trump, if the worst comes to the worst I assume that Mike Pence will step up to the plate, and at present he appears unblemished and is keeping distance between himself and Trumps travails. We might even see a relief rally if things eventually unravel.

Finally I have looked again at Ashteads last four years financial results and remain impressed. Free cash flow of £319mil in 2016-17 is particularly impressive.

Of course, all the above is only my own view, others views are available! (DYOR)

P.S. I leave it to others to take up your 'nasty shorters' comment - brace yourself!

[bracke] 13/7/2017 09:51

Good day ian

You may be surprised to read that I agree with what you have posted above. My concern is covered by "unless the fundamentals change". Initially fundamentals outside of the company which then affect the fundamentals of the company.

To-day's gap up looks a little promising as it nudges against the top of the channel but it's at this point the nasty shorting types appear.

[ianwwwhite] 12/7/2017 19:19

bracke

Take heart, in my humble opinion we are looking at a divergence between AHT's fair or intrinsic value, and the vagaries of market pricing. In time it should right itself, unless the fundamentals change.

The question as you rightly say is how long will it take? In the absence of better opportunities elsewhere, I personally am inclined to sit tight and even buy a few more if the price drops appreciably further.

No advice intended, and good luck!

[bracke] 12/7/2017 16:56

ian

Abstract....quite possibly.


If I had been smart I would have sold after my purchase when it rose to just short of 1700 but 'riches beyond avarice' hove into view ie. greed and I decided to hold.

As for the share price regaining ground. It has been doing so regularly and is a feature of a down channel, unfortunately it's unable to hold on to it and build.

"if you have the patience to wait until upward momentum returns."
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The danger is that the market is in a long run bull plus the FED is increasing interest rates and unwinding QE plus the antics of Mr Trump cannot be ignored.

AHT is a cyclical share. If the market turns and the share price goes with it. I would probably need the patience of Job!!

[ianwwwhite] 12/7/2017 16:30

Whoops, a double post, see above
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