Ashtead Share Discussion Threads

[riley109] 12/12/2018 09:30

The only Bot at play here is a Maybot.

[discodave4] 12/12/2018 08:27

Must be bots/shorts at play here?.

[discodave4] 11/12/2018 22:46

Some interesting broker comments (see below from Sharecast).Comforting to see that Peel Hunts eps forecast is 178p, which is about what I thought (180p) based on today's results.........think I'm learning!.lol.(Sharecast News) - Brokers have backed Ashtead Group's booming US business, after the rental company posted a strong set of interim numbers and upped its full-year targets. Interim pre-tax profits at Ashtead, which loans industrial equipment such as diggers and other construction tools, surged 25% to £610m, while group rental revenues were ahead 18% at £2.04bn. The group also struck a bullish note for the health of the wider construction sector and said it expected to beat its own expectations for the full-year. Most of the growth has come from Ashtead's US division Sunbelt, which has been investing in equipment and expanding its Canadian presence. Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Ashtead is one of the most heavily US exposed businesses on the UK stock market, and as Trump's America enjoys a tax cut-fuelled investment boom, that's stood it in great stead. Investment has dramatically increased the kit Ashtead has available for rent and both the US and Canada have seen the amount of equipment on rent at any one time increase." Hyett warned that higher investment meant debt had reached £761m, leaving Ashtead "more vulnerable to a downturn". But he added: "Overall it looks like Ashtead's bet on US growth is paying dividends, and there is little sign in these numbers that the boom has run its course." Analysts at AJ Bell said: "The US is a key focus for Ashtead, where construction spending is growth faster than GDP, driven mainly by private non-residential building and big infrastructure profits. "Ashtead consistently invests in its existing business and also makes bolt-on acquisitions. This is driving high rates of growth and the company is also managing to remove costs." RBC Capital Markets, which has an 'outperform' recommendation on Ashtead and a price target of 2,800p, said: "The market is clearly beginning to discount the end of the cycle in the US." But it reiterated its recommendation, arguing that much of the risk was already being factored in. "We certainly don't expect to see a significant deterioration in US non-residential construction markets during 2019 - order backlogs remain at record highs. "We also continue to question if the relentless focus on this one data point is valid, given the weighting of Sunbelt revenues is now outside of construction in the US." Andrew Nussey, analyst at Peel Hunt, which has a 'buy' recommendation, said: "We anticipate increasing our April 2019 pre-tax profits from £1.075bn (consensus £1.048bn) to £1.1bn, to give earnings per share of 178p. We have left currency unchanged for now, but this could add a further 2%. Shares have been weak on wider macro concerns and continue to offer value on 8.4x April 2020 EPS, given growth, quality and positioning. We maintain our target price of 2,500p to reflect the momentum and upgrades." Charlie Campbell at Liberum has a 'buy' and 2,390p price target on Ashtead. He expects consensus pre-tax profits to rise by around 3% on a constant currency basis or as much as 7% if sterling/dollar fluctuations are taken into account. "Investment in fleet, share buybacks and the dividend all speak to confidence of management in outlook," he added. After Ashtead's shares lost a third of their value in the last three months, Richard Hunter, head of markets at interactive investor, added a cautionary note. "There have been more recent concerns of an imminent downturn in the US construction market - and, for some, the economic situation in general - which has led to an erratic performance of late in the major indices. Coupled with Ashtead's exposure to an extremely cyclical market and an acquisition nature, which brings potential execution risks, the shares have been pounded even if the company's performance is painting a different picture. From an investment perspective, the dividend yield of just over 2% is unremarkable."

[smcni1968] 11/12/2018 22:29

• United Rentals (NYSE:URI) is up 3.1% in postmarket action following updates from its investor day, including resumption of a share repurchase program.• The company reaffirmed 2018 full-year guidance, for revenue of $7.89B-$7.99B (vs. consensus for $7.91B), EBITDA of $3.815B-$3.865B, cash from operations of $2.725B-$2.875B and free cash flow of $1.25B-$1.35B.• For 2019, it's guiding to revenue of $9.15B-$9.55B (above consensus for $8.93B), EBITDA of $4.35B-$4.55B, cash from operations of $2.85B-$3.2B, and free cash flow of $1.3B-$1.5B.• It's resuming a $1.25B repurchase program that it paused on Nov. 1, to focus on integrating its acquisition of BlueLine. About $210M worth of shares were bought on the program through Sept. 30; the company intends to wrap up the full program by the end of 2019.

[discodave4] 11/12/2018 19:16

Guys,Please can we park the issue once again on the buybacks. I respect all of you and your views but can you also just respect the fact that you cannot please everybody all the time and we each have a right to communicate our views - but this is just going over old ground again and tbh it's getting boring - sorry and no offence intended (but it is!).DD

[fenners66] 11/12/2018 18:54

Since I have seen the virtues of investing in a well-run successful company for almost a generation I will not be needing any help with that , thanks.

As has been said before you can admire a lot about a company and benefit from it - but you do not have to agree with everything it does.

A company's shareholders should constantly scrutinise the directors' decisions and actions - that's our job.

When that does not happen things can go pear shaped - look at Persimmon for example you know there are many others....

So you would ignore the outcome of £ 425m being spent .

We know what the outcome of £425m off the debt would have been !

Roughly what £25m a year saved in interest and no need to renegotiate the next debt tranche before time with the associated "exceptional costs "

We know we do not see eye to eye on buybacks - but there have been no facts aired to show me any benefit whatsoever...

[ianwwwhite] 11/12/2018 18:27

Out of Office Response

I will not be answering any further questions on share buybacks - DD is right. (post 56162)

For my part I will evaluate the success of the share buyback scheme when it has finished, and at that time, if you are still a shareholder we can exchange views on the facts and outcomes.

I wish you luck with your investment but frankly if you cannot see past the 'buyback issue' to the virtues of investing in a well-run successful company there is little I can do to help..

IWW
Edited 12/12/18

[fenners66] 11/12/2018 18:11

Yes, you may be right , either Mr Drabble or the incoming replacement.

I cannot answer my two questions above.
When I say "remaining shareholder" - I mean the shareholders that are still shareholders.

It seems that you cannot answer them either..

[ianwwwhite] 11/12/2018 16:21

fenners

The Capital Allocation Objectives are quoted verbatim, and in the order they appear in AHT documentation.

As for the dividend, again I quote from AHT:
'In line with its policy of providing a progressive dividend, having regard to both underlying profit and cash generation and to sustainability through the economic cycle, the Board has increased the interim dividend 18% to 6.5p per share (2017: 5.5p per share). This will be paid on 6 February 2019 to shareholders on the register on 18 January 2019.'


Finally I know that you have said that you persistently raise the matter of 'buybacks' in the hope of bringing your views to the attention of AHT directors. You will no doubt be disappointed that they have reaffirmed their intention to carry on through 2019-20 with a further buyback of £500m. Perhaps it would be more effective for you to write to Mr Drabble direct?

[fenners66] 11/12/2018 15:07

Ian

>I am sure that Mater is aware of Ashtead's stated Capital Allocation Objectives:

* Organic fleet growth
–Same-store
–Greenfields

* Bolt-on acquisitions

* Returns to shareholders
–Progressive dividend policy
–Share buybacks


Interesting that you or they ordered the CAO in that order


Seems we all agree with the first section - if they see earnings enhancing acquisitions (from cash reserves) given the plant hire market is still consolidating and there are still economies of scale to be gained.

Thereafter it is noted that share buybacks are last on the list ....

So that progressive divi policy should have been more progressive first.

What remaining shareholder benefit have we received from spending £425m ?
How is this reflecting in my shareholder return ?

[bracke] 11/12/2018 14:53

ian

"Which bit of a 'sustainable dividend through the cycle' did you not understand?"
====================================================================================

I just wanted confirmation. This will be an interesting one.

We will have to agree to disagree but I still fail to see what good the buyback has done especially at the levels it commenced.

[ianwwwhite] 11/12/2018 14:38

Bracke

Which bit of a 'sustainable dividend through the cycle' did you not understand?

I rest my case, and by the nature of your reply, I think you should too :-)

[bracke] 11/12/2018 14:19

ian

Mater is an advocate of moderation in all things....well not quite all. She would be happy with a combination of increased divi and debt repayment

"I must admit to being a bit puzzled, if Mater is so unhappy about AHTs capital allocation objectives, the level of the dividends and the buyback program, why on earth did she buy the shares recently in the first place?"
==================================================================================

Mater considered them a reasonable buy and still does but expects the folly of the buyback strategy will be realised.

"Was she badly advised?"
=========================

That's a moot point.


" hence the need for a 'dividend sustainable across the cycle'. You're preaching to the choir here.."
=================================================================================

Does that mean the divi will be maintained at the current level when the up cycle ends?

Will the choir be singing 'In the Bleak Midwinter' or 'Joy to the Shareholders'?

[ianwwwhite] 11/12/2018 13:44

Bracke,

So to summarise, Mater does not want to increase the dividend after all, but to reduce debt instead?

I must admit to being a bit puzzled, if Mater is so unhappy about AHTs capital allocation objectives, the level of the dividends and the buyback program, why on earth did she buy the shares recently in the first place?

Was she badly advised?

Incidentally, we all know that AHT is in a cyclical industry, hence the need for a 'dividend sustainable across the cycle'. You're preaching to the choir here..

[bracke] 11/12/2018 13:34

Good day ian

Mater says "nuts" to 'Capital Allocation Objectives'. Her interest is cash in the bank or handbag.

"Perhaps you could enlighten us, at what level does she think a 'sustainable across the cycle' dividend should be set, bearing in mind for most companies, Markets react negatively to a company's subsequent dividend cut announcement because investors and analysts fear the worst?"
====================================================================================

Mater's view on this subject is; you will not be surprised to read; very similar to my own.

True, markets react negatively to dividend cuts and perhaps markets also react negatively to companies spending large amount of money on buybacks to no apparent positive outcome.

Have the buybacks supported the SP?
Have buybacks increased the divi beyond previous % increases?

If the Directors were wary of increasing the divi beyond previous % increases then as fenners has posted pay down debt and prepare the company for the eventual downturn. Always remember this is a cyclical share

[discodave4] 11/12/2018 13:26

Thanks H2, was just curious about how it's viewed by more experienced investors.Don't use stock filters but how do buybacks impact on say Slaters peg selection?, and do analysts rerate downwards company's with a buyback programme in operation?. Sorry, just probably overthinking as usual.

[ianwwwhite] 11/12/2018 12:28

Good day bracke,

Re dividends your post 'Mater will be pleased about the 6.5p but less so when it could have been more than doubled if the cash spent on buybacks had been used to pay a larger divi. Good post fenners.'

I am sure that Mater is aware of Ashtead's stated Capital Allocation Objectives:

* Organic fleet growth
–Same-store
–Greenfields

* Bolt-on acquisitions

* Returns to shareholders
–Progressive dividend policy
–Share buybacks

.... and of Ashtead's 'progressive dividend policy, with consideration to both
profitability and cash generation at a level that is sustainable across the cycle'

Perhaps you could enlighten us, at what level does she think a 'sustainable across the cycle' dividend should be set, bearing in mind for most companies, Markets react negatively to a company's subsequent dividend cut announcement because investors and analysts fear the worst?

Of course share buybacks are viewed differently...

[smcni1968] 11/12/2018 11:34

we have URI's investor day today as well

[hydrogen economy] 11/12/2018 11:09

DD
"Is that normalised to take on board share buybacks?."

Er no - plotting net profit would give that, but I am more interested in the earnings my small pot of shares are generating. I don't care if the company boost EPS by spending to expand the business or buying back shares. Plotting EBITDA/EV might be more meaningful as it reflects debt but I will leave that to others.

For the record
Q1 11-12 there were 553.3 m shares issued and 4.3p EPS
End Oct 18 there were 499.2 m shares issued and 54p EPS
ie. it makes very little difference.

H2

[bracke] 11/12/2018 10:51

Good day All

Ref the competition. Thank you for the congratulations . Would you expect anything less from an Elite Guru. That's a rhetorical question.

Mater will be pleased about the 6.5p but less so when it could have been more than doubled if the cash spent on buybacks had been used to pay a larger divi. Good post fenners.

I note that following the usual rise in share price after the results one of the upside gaps been filled. Very disappointing it was unable to fill the larger one and 'telling'. The rise created a gap to the downside. I doubt it will remain unfilled for long.

[fenners66] 11/12/2018 10:19

FTSE rising and AHT falling - perverse....

But these results will take a few days to sink in I guess.

Despite fears in the US - they still have infrastructure to invest in and of course they are getting more than their share of weather related catastrophes to fix.

[ianwwwhite] 11/12/2018 10:14

fenners66 & DD4

re the 'Fenners Competition'

Thanks guys :-)

[discodave4] 11/12/2018 10:03

Good job they didn't issue an in-line or below expectations- let's hope those across the pond are more appreciative of quality and growth.

[fenners66] 11/12/2018 09:52

"after spending GBP425m to date on our share buyback programme" ....


and only £159m on dividends last year ......


.....Our share price has fallen 35% !!


Cut the debt and pay less in finance charges and increase the dividend so shareholders gain not share sellers and traders!


Markets are looking forward and are starting to assume the yield curve is pointing towards a US recession for 2019/20.

So indebted companies are being sold off.
No one waits until the recession has arrived.
So all the share buybacks for the past year did nothing to stem the tide - and they can't - as it is "all things being equal the EPS rises with buybacks "

But all things are not equal - equity valuations have fallen and the good companies fall as well - they are not immune.

How much of the £425m is now shown to be wasted ?