Ashtead Share Discussion Threads

[bracke] 11/12/2018 14:53

ian

"Which bit of a 'sustainable dividend through the cycle' did you not understand?"
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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?"
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Mater considered them a reasonable buy and still does but expects the folly of the buyback strategy will be realised.

"Was she badly advised?"
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That's a moot point.


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

[discodave4] 11/12/2018 09:31

Hi fennersWould be nice to have a special divi or increased yield but they are keeping it in line with growth, so about 2% which isn't too bad I suppose. Congratulations Ian and bracke.........begrudgingly! Haha.

[fenners66] 11/12/2018 09:21

ianwwwhite
3 Dec '18 - 10:23 - 56106 of 56139

Fenner's competition update 3/12/18:

fenners.....7p
DD4.........6.75p (reiterated 3/12/18)
Ian.........6.5p
Smcni1968...6p
Bracke......6.5p
palwing.....7p

Looks like it's possible we'll be needing a tiebreaker..


And the winners are .......


Ian & bracke

Well done guys.


I have to say I was being optimistic (as a little prompt) at 7p


But look at the first half earnings compared to the dividend 95.1 vs 6.5

[discodave4] 11/12/2018 09:20

SMCNYep appreciate that, but surely when looking back on historical eps (as per H2 graph) it's skewed because of changes over time in the number of issued shares (due to buybacks / placing etc) rather than the relative increase in earnings - hence my question that a normalised eps graph would look completely different I suspect.

[smcni1968] 11/12/2018 09:09

in calculating eps? yes. That's part of the theory behind buybacks - fewer shares left so the owners of each get a bigger 'share' of the profits

[discodave4] 11/12/2018 09:01

H2Is that normalised to take on board share buybacks?.

[hydrogen economy] 11/12/2018 08:28

The plot of quarterly EPS over last few years shows just how good these results are, I wasn't able to paste into advfn chat but have put on iii link below.

hxxps://www.ii.co.uk/discussion/t/q2-results/1146059

H2

[rescuer] 11/12/2018 07:56

another set of brilliant results - well done AHT

[palwing32] 11/12/2018 07:43

Looks positive to me. DJI blue too. GLA

[palwing32] 11/12/2018 07:42

DividendIn 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.

[palwing32] 11/12/2018 07:41

"Our business is performing well in supportive end markets. Accordingly, we expect full year results to be ahead of our prior expectations and the Board continues to look to the medium term with confidence."

[discodave4] 11/12/2018 07:38

Morning, always nice to read:"Our business is performing well in supportive end markets. Accordingly, we expect full year results to be ahead of our prior expectations and the Board continues to look to the medium term with confidence."Would assume they mean ahead of what they expected at Q1.With H1 eps 98.8p, I reckon year end could be close to 180p, putting this on a forward PE of less than 9.Dividend 6.5p!.........think that's a typo, should be 6.75p.Fingers crossed the market likes the numbers and reassurance that growth is being maintained, with Canada looking like an astute move.