Ashtead Share Discussion Threads

[fenners66] 17/6/2014 14:43

Gents,

I confess I hurriedly used the profit before tax and divided by shares in issue as I had these numbers in my head, whereas the EPS uses Profit after tax.

The tax rate used is around 36%.

I could however try and make the case that since the Tax paid was a fraction of last year's tax charge, which had 5x as much deferred tax as was paid, since this years deferred tax charge is equally as large that the post tax EPS is misleading............

But that would fly in the face of years of accounting standards and couldn't possibly be argued successfully , even if (with a provision for 39% US tax) after the next US election it is decided that tax rates are too high.....

On the subject above of currency, if the pound strengthens then the US $ debt is reduced so it still works.

[ramridge] 17/6/2014 14:32

fenners66 - sorry to be dense but I can't reconcile my thinking to yours.
- EPS forecast for 30/4/2015 is 54.4 (-)
- consensus broker price forecast is 1010 (Hargreaves L)
- so that gives a prospective PE = 18.6
- based on todays price say 837, PE is 18.1
- Now if you are saying you would like to see PE drop to 10 next year, that means prospective price = 10* 54.4 = 544 pence. Which is your implied fair valuation price.
I suspect we are not on the same page... Subtracting the net cash doesn't make much difference to these numbers.

[discodave4] 17/6/2014 14:24

LM,Sorry, last question (trying to learn).Has the forecast eps % growth only reduced because they have exceeded this years eps (from 45p to 46.6p). In other words the analysts forecast next years eps (53p) which equates to 18% growth (of the original 45p forecast), which is not as much of a forecast drop. However, the 53p forecast eps is now only a 15% increase so it looks worse?.DD

[ramridge] 17/6/2014 13:42

LuckyMouse. Fascinating. So the current forecast data that you are quoting is fresh off the press (or podium to be more accurate) today. I get it now.

[discodave4] 17/6/2014 13:29

Aaahhh pennies dropped.......target share price next year say £9, it's ahead of itself - assuming the forecasts are not exceeded again!!.Time to do some work now.DD

[luckymouse] 17/6/2014 13:18

Hi DD

Good point - i checked last results and whilst PEG & EPS% were slowing, REV% was flat and PBT% (the most important) climbed from 58.90% to 66.43%

Which I would interpret as mixed to positive - so I wouldnt at all be surprised if it traded in a mixed to positive way (sounds like it did!)
The one day delayed secondary reaction may have been brokers posting upgrades the next day having digested the results

ATB
LM

[fenners66] 17/6/2014 13:07

Ramridge - I think you have misunderstood my take on the P/E.

I want to see a P/E of 10 and no more to support valuation over the medium term.
But AHT has been much higher for the last few years , now we get down to a level of 11.5 and forecast for next year of 9.6 (or so) we are not only forecasting a P/E of below 10, but that should be next year with the company still having growth prospects for the years following.

So a P/E of below 10 for a growth company is too low.

I had been worried over the last few years that the valuation had got in front of the earnings , so to see it back down to this level is more comfortable (based upon real results rather than forecasts ) than we have been for many years.

So to re-iterate I believe the anal-ysts will still justifiably give this a BUY rating and remain a holder ....

[ramridge] 17/6/2014 13:06

LuckyMouse. Where did you get the current forecast data from? If this is today's news then your argument makes sense. But if these figures were already known yesterday or earlier then the share price would have factored this in already. Doesn't not explain the sharp drop today.

[dealer1972] 17/6/2014 13:00

Agree DD. I wouldnt have thought we'd have seen 3 immediate buy reiterations from the brokers either if the results signalled a significant reduction in growth. More likely hold

[discodave4] 17/6/2014 12:55

LM,Could the same have been said for last years finals - yet the share price on results day went up 1%, with a gap up next day open of another +2%.Agree that the rate of growth y-o-y is likely to reduce (marginally?) given the exceptional results of previous years (especially 2012), but surely this is factored in by the analysts forecasts?. Of which they have just exceeded, so I can't get my head around it.DD

[ramridge] 17/6/2014 11:27

Maybe this is a fallout from Carney's rise in interest rates statement. Rise in interest rate + lower QE implies stronger £. Ashtead derives over 85% of revenue from the US. So not good news for this share.

[2flatpack] 17/6/2014 11:17

With the ending of QE are ii revaluating prices .
the share price seems to have been under pressure for the last 2 months or so.
I make last year PE 18.7 that was at a share price of 860 which is a lot higher than people are quoting.
cheers

[james97] 17/6/2014 10:58

Results are even more impressive considering the general US slowdown due to severe weather Jan/Feb. Sunbelt appears not to have noticed this.

Stock market plunge just another mad reaction that should soon be reversed.

[ramridge] 17/6/2014 10:53

I have a theory that the fall is linked with current doubts about Rooney's World Cup performance or lack of it. Why? Because if nothing makes sense the this is as good as any explanation.

[clarky5150] 17/6/2014 10:51

No doubt you cannot find a piece of news to explain a drop of 120p in a week at the end of May which was recovered or the extra 50p it put on after that. Maybe there isnt a hidden issue that everyone is looking for. Yes there is a lot of volitility at the mo but look at the meteoric rise over 2 years. I feel we have further to go yet but there may be some speed humps oalong the way.

[bracke] 17/6/2014 10:46

In the words of a Mr McEnroe....."YOU CANNOT BE SERIOUS!!!!"

Such are the machinations of the wonderous world of the stockmarket.


I have consulted the runes and determine the following.

First support at 826. Can't tell you how I have divined this level it is in the knowledge of Elite Gurus.

Second support at the more mundane Daily SMA 200 currently at 784.

Third support at 763 which was a previous low.

If none of these hold it would be very concerning.

[ramridge] 17/6/2014 10:38

Fenners66 - interesting to read about your target of PE 10 for growth companies in the long term. Anything over that you consider too expensive. I doubt that there are any such gems left in today's market. Could you name a few please?
Re. Ashtead. I have trawled the news channels and cannot find a single report that can explain a drop of over 6% given the sparking results announced today. The stock market indeed moves in mysterious ways.

[mclellan] 17/6/2014 10:37

Good thing it wasn't bad news!

[clarky5150] 17/6/2014 10:32

aye. A nice steady rise from here over the coming weeks to labour day for a push on thro £10 by Christmas.... would be nice.

[dealer1972] 17/6/2014 10:30

I'd like to see it a lot higher tbh lol :P. Would be good if could revisit that intra-day gap just above 870p

[clarky5150] 17/6/2014 10:28

I would like to see us back above 850p before close of play.