Ashtead Share Discussion Threads

[clarky5150] 01/3/2016 16:29

Hell of a recovery today. Just goes to show how overdone/contrived the opening bloodshed was.

[broadwood] 01/3/2016 16:06

AHT mainly involved with non residential - so even better.

US construction spending rose more than expected in January, according to the latest figures from the Commerce Department.
Spending increased by 1.5% on the month to a seasonally-adjusted rate of $1.14bn, compared to economists' expectations for a 0.4% rise.

On the year, January saw a 10.4% increase in construction spending.

Residential spending was virtually flat in January and 7.6% higher on the year, while non-residential spending was up 2.5% on the month and 12.3% on the year

[1staxs] 01/3/2016 15:04

Very positive

[broadwood] 01/3/2016 15:02

US construction spending just out. Up 1.5%.

That's a big beat.

[clarky5150] 01/3/2016 13:45

Highest volume of 2016 I believe

[broadwood] 01/3/2016 13:07

On with the Motley.

'Equipment rental firm Ashtead Group (LSE: AHT) has grown its earnings remarkably strongly over the past five years, and the 27% EPS growth forecast for the year to April 2016 would put the shares on a modest P/E of 11.6 and give us a PEG of only 0.4. And 2017 forecasts drop the P/E to under 10 and maintain the PEG at 0.5.

The shares had perked up a bit ahead of today’s third-quarter update and the firm did report a 20% rise in pre-tax profit for the nine months, to £482m, after rental revenue grew by 17%. The full year should be in line with expectations. But the share price was down 13% to 800p by mid-morning, hit by the company’s plans to reduce capital expenditure next year.

There may still be weakness in Ashtead’s US markets, but at today’s price the shares look oversold to me'.

[kooba] 01/3/2016 12:50

Good to see directors buying meaningful amounts...good vote of confidence.

[bracke] 01/3/2016 12:39

From a charting/technical viewpoint todays price action is classic.

From the open it gaped down and continued down through the Median Line (I have mentioned this previously) to test the February low which is also the Weekly SMA 200. It then rose back up to test the Median line where it currently rests.

What happens next is at the behest of the US.

[ianwwwhite] 01/3/2016 12:38

Broadwood

Re: seems to me like good husbandry cutting capex on the basis of what might happen. Needless to say, the market is bound to view it as a negative.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I agree entirely, AHT increased capex when the market demanded it, and is now showing prudence in keeping options open, whilst short term prospects are uncertain. In my view this management team are playing it right, with flexibility to meet market demand. They are pretty capable and experienced, with an outstanding track record imho.

[gary1966] 01/3/2016 12:05

Just back from the gym and surprised to see my limit order filled at 774p. Someone been playing games this morning, me thinks. As people have already observed, let's see how quickly this bounces back. Personally I have never been disappointed with a company that is expecting double digit growth and can be bought on a P/E of less than 10, and with good management history. Most commentators are saying that the bottom is in on POO and so that headwind could easily turn into a tailwind.

GLA

[bracke] 01/3/2016 12:03

Good or should I say Unfortunate day Topicel

I am an interested bystander.

After the share price moved up from 900 yesterday I was expecting; in true AHT fashion; a spike up with the results. There was a spike........

I tend to agree with ian, something was going on yesterday, all a bit 'iffy'.

Last week I was looking at the list of large investors on the AHT site and pondered why were none of them holding more than 5.00% (one was at 5.08%). If this share was heading back up to the highs why were they not buying?

fenners and a few others will remember 'certain occurrences' with this share. We all get the information but some appear to have 'premonitions'.

[broadwood] 01/3/2016 12:02

ian - seems to me like good husbandry cutting capex on the basis of what might happen. Needless to say, the market is bound to view it as a negative.

[ianwwwhite] 01/3/2016 11:59

broadwood, liam1om,

Useful and interesting posts, thanks.

IW

[liam1om] 01/3/2016 11:53

Courtesy of FT Alphaville. Barclays write up from this mornings con call:

Key messages from the call: (1) Current trading strong: usual seasonal pick-up Jan/Feb and positive indicators for spring/summer. First month of 4Q (Feb) rental rev +19-20%, and management think 1Q17 will see growth in mid- to high-teens – reinforcing that 3Q a particularly tough comp; (2) Capex flexibility: planning to land a good level of capex in 1H given current lead indicators with flex around 2H – have 60-day lead times so no need to decide now what will be spent in FY17 - can cut or increase depending on markets; (3) Capital allocation: “See no point in de-levering significantly below 1.5x” – our forecasts see leverage at 1.5x @ 30-Apr-17 which opens up possibility of share buybacks/special dividends in FY18, clearly whatever decisions are taken will depend on what the market backdrop is at that stage. (4) Acquisitions: vendor pricing expectations elevated as smaller companies are generally seeing strong current trading – not going to pay these multiples and will just continue with greenfields (planning to open similar number in FY17 as opened in FY16 and if market turned down, would just reallocate fleet from existing branches as ambition to grow footprint holds whatever the environment is). (5) Regionally, Florida, California and Atlantic Coast are strong, weaker in Texas and other oil exposed areas but still higher yoy. In summary, shares have fallen sharply today as the focus has fallen on the moderating of top-line growth expectations rather than the message of improving cash dynamics over the next few years in a low-market growth environment – as we said in our note this morning, our base case is that this is a slower phase of growth in Ashtead’s end markets rather than a recession and we therefore see a number of years of good profit growth (accompanied by improving cash flow) ahead. Post this morning’s share price fall of 15%, the shares are trading on a CY2016E EV/EBITDA of 4.8x, falling to 4.1x in CY2017E (PE 9.2x, falling to 8.1x).

[broadwood] 01/3/2016 11:47

Shares in equipment rental firm Ashtead fell sharply on Tuesday, with analysts pointing to concerns over the company's plans to cut capital expenditure next year, as it reported a jump in third quarter profit.
For the quarter ended 31 January, statutory pre-tax profit rose 16% to £133.5m on revenue of £612.2m, up 15% from the year-earlier period.

In the first nine months of the year, pre-tax profit was up 20% at constant exchange rates to £482m despite the slowdown in oil and gas markets that provided a headwind which will continue in the fourth quarter.

Ashtead said growth was driven by increased fleet on rent with yield flat year-over-year.

Chief executive Geoff Drabble said: "Looking forward, while we are watchful of the broader economic environment, we continue to see encouraging growth opportunities and expect double digit fleet growth in the US in 2016/17.

With both divisions performing well, strong end markets and our strategy clearly working, we expect full year results to be in line with our expectations and the board looks forward to the medium term with confidence."

The company said capital expenditure would be at the top end of its previous guidance for the full year, at around £1.2bn at current exchange rates.

Going forward, it said it was "entering a very different replacement cycle" as it laps its low capital expenditure years of 2009, 2010 and 2011 and therefore its replacement spend will be much lower than recent years.

"Reflecting our desire to be watchful of broader economic trends before finalising our Q3 and Q4 2016/17 spend, we have a broad range for next year's capital expenditure of £0.7 to £1bn," Ashtead said.

The stock was down 12% to 811.95p at 0928 GMT, as analysts highlighted the cut to capex next year.

Bank of America Merrill Lynch said 2017 capex guidance implied double-digit fleet on rent growth versus mid to high teens growth in 2016.

Charles Huggins, investment analyst at Hargreaves Lansdown, said the capex reduction could be seen as painting a negative picture of the US economy, where the group derives most of its profits.

'Ashtead generates the bulk of its profit in US non-residential construction markets where conditions remain favourable - for now. However, the market is clearly worried about a potential US slowdown. Ashtead's plans to cut back capital expenditure and reduce leverage are sensible in this context, but do little to allay investors' concerns of tougher times ahead," he said

[ianwwwhite] 01/3/2016 11:40

I'm guessing that the guys that were shorting the hell out of AHT this morning have now all gone down to the winebar to celebrate...flaming firenzas all round!

This does look more than a little stage managed, 6 million plus shares traded yesterday and after a tussle the bulls apparently won out, then lo and behold getting on for a similar volume today, and the bears appeared to have the upper hand.

Quite a coup, but seems to me more 'market manipulation' than a change in AHTs fundamentals.

I bought a few more today, interesting to see whether the Short Tracker 5.98% changes over the next few days.

[topicel] 01/3/2016 11:30

You can say it's interesting Bracke old fellow. If you are still an interested bystander and not invested you'll be heartened by my little tale.

After my tealeaves predicted a week or so back a strong push through £9 before results there I was hovering to sell at 4.25 p.m. yesterday. Quoted 927p and said to the missus, "I don't want to give you that" in best Chris Tarrant style and we agreed to check out the likely to be decent results and then decide.

So what if it falls 2-3% like other quarterlies of late, it might not....

To my shame I ignored the mantra of Elite Gurus ringing in my ear "mind the gap", and now I'm looking for someone with a long rope again!

You've got to laugh?

Topicel

[bracke] 01/3/2016 11:26

Good day clarky

I suspect I will be going thirsty!

The question now is what will the US do when it opens?

[clarky5150] 01/3/2016 11:25

Having been an investor in Aht for well over 10 years they never cease to amaze my for their lack of ability to blow their own trumpet come results time.

[clarky5150] 01/3/2016 11:23

If we fill that new gap this week I'll buy you a pint (or a Creme de menthe frappe) Bracke.

[clarky5150] 01/3/2016 10:46

Volume has picked up now. Any levels 2 people out there got a snapshot of the order book?

[1staxs] 01/3/2016 10:20

Now the bounce is on.... will be interesting to see where it stops. Yes Q3 showed signs of slowing but growth is still there and the slow down was due to oil and gas. Oil and gas prices are already picking up and for this overreaction to be justified it needs to be combined with a far stronger weakening in the US economy. Hedge funds predicting the future wrong here.... or at least without the weighted justification, too early yet by a long shot to make this kind of call