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URI results beat expectations however they trimmed their guidance for the full year. Hence the fall in the SP of 12.73% on the week and the consequent fall in the SP of Ashtead back to their results in June.
C' est la vie!
URI post finals on Wednesday 17th. Their share price rose 3.8% yesterday.
According to my calculations (possibly too grand a word for such a simple thing to discover, but still I might have made a mistake somewhere) this is the total number of shares bought so far in the share buy-back scheme.
It just HAS to make a difference to the SP... Meanwhile, let's hope that Trump and his Chinese friends have a nice time together at their forthcoming meeting, and on Monday the SP will further reflect that.
So a decent set of figures, but more postitively, management still talking about a supportive market. EPS of £2 for 2020 looks eminently achievable, and I don't see why this won't be priced at 15x by year end. On this basis, a £30 year end target does not look ridiculous. Cash flow is strong as well, and sharebuybacks will continue to support the price. GLA
£300k buy from a non-exec director. They even had the decency to wait until after results announcement (makes a pleasant change). This company goes from strength to strength and I think the US construction market risks are overplayed. I'll be tucking these away and reviewing again once they've gone up by 20%.
Now there's a turn up for the books.
Ashtead actually rising on good results and what's more pulling URI up as well!
Several analysts' views quoted on FT Alphaville:
I wonder what the markey will do to thr sp today.
The ones doing the buying are AHT themselves. Now down to 466M share, which means something like £680M spent on buybacks.. I'm sure they know what they're doing, but somehow I think I'd have preferred to have the cash...
"Buying opportunity at Ashtead, says Numis
Fears of a slowdown in US long-term project spending are overdone and creating a buying opportunity at equipment rental company Ashtead (AHT), says Numis.
Analyst Steve Woolf reiterated his ‘buy’ recommendation and target price of £28 on the shares, which rose 6.5p to £19.66 yesterday.
‘The broader trading environment remains supportive, and we expect Ashtead to continue to demonstrate further market share gains,’ he said.
‘We believe concerns of a rapid decline in its US end-markets are overdone. Trading at a significant discount to historic earnings valuations, the shares present a buying opportunity.’"
Geoff Drabble steps down as CEO today. Let's hope Brendan Horgan can do as well as Geoff over the last 12 years with the share price then being around £1.40.
Agree, SP doubled in 4 years, up 400p in 4 yrs, good business, and fundamentals solid ie steady dividend growth- have taken a few profits ie 10% tranches sold over the years, bought again at dips, what's not to like? Love to see their diggers on muddy building sites everywhere......
United Rentals is expected to report a Q3 increase in EPS from $2,87 to $3.1 when it reports after hours on Wednesday.
Both URI and AHT shares have risen in anticipation this week. It remains to be seen what happens on Thursday.
On one of the investor presentations on the AHT website an American analyst asks if the company is being too CONSERVATIVE with its leverage!
For AHT to suspend or reduce shareholder returns in order to pay down debt might not be a popular move.
I'm no fan of the buybacks either, but seems we're stuck with them. If you want the cash you'll just have to sell some of your shares. When I last bought AHT there were 500m shares in issue and now there are 470m, so in theory if I sell off 6% of my holding I've got the equivalent to a dividend (I think). Not that I'm going to sell, AHT still seems to have very bright prospects, ups and downs of the US economy allowed for.
If owning individual shares causes you sleepless nights perhaps you would be better off with investment trusts where the risks are spread.
You know what they say: "if you can't stand the heat get out of the kitchen".
"Can AHT service its debt comfortably?
Since total debt levels have outpaced equities, AHT is a highly leveraged company. This is not unusual for mid-caps as debt tends to be a cheaper and faster source of funding for some businesses. We can check to see whether AHT is able to meet its debt obligations by looking at the net interest coverage ratio. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In AHT’s, case, the ratio of 8.85x suggests that interest is appropriately covered, which means that debtors may be willing to loan the company more money, giving AHT ample headroom to grow its debt facilities."
Debt not all bad?
I guess I shouldn't be trading, since I understand so little about how things work in the stock market.
The Ashtead share buyback, for example. Today Ashtead spent 1.5m on buying back shares. Yet it has massive debt. How does that work? Shouldn't they be aiming to be debt-free, before they start throwing their money around?
Oh well. Not understanding nonetheless, it seems to me that the brokers agree that Ashtead should be in the mid 20s, i.e. £25.00 per share, so all I can do is wait for it to correct itself.
Meanwhile, at least there is the dividend, albeit rather small because of Ashtead trying to satisfy both the Americans (who like buybacks) and the UK (who like dividends). Holding the shares is still better than money in the bank - so long as the shares don't keep going down! I hope the last few days of recovery continue.
With a bit of luck, the pound will plummet!
OK, for "yield" substitute Free Cash Flow Yield:
Free Cash Flow yield (FCF yield) is a measure of the amount of cash left over at a company after it has paid its operating expenses and capital expenditures. FCF yield tries to capture how much cash is left over for investors. For the middle of the road company in the S&P 500, the FCF yield is about 4%. Google has a FCF yield of 2.53%. Facebook is 3.59%. Amazon is 0.95%. Apple is 5.21%. When you look at tobacco, Altria is 5.70%, British American Tobacco is 6.59% and Phillip Morris is 6.65%.
At 7% AHT is still out ahead even while posting double-digit growth. And I still think the interesting times start in 2021 when AHT should emerge from its current empire-building phase with a spare £2 per share of growth capex in its pocket.
Of course, as we all know AHT is a highly-leveraged house of cards that is built on debt and an obliging North American economy and could collapse at any time! That's why I happened on the above article while researching non-cyclical stocks that are not particularly exposed to the USA.
I would never add a share BB into the yield, but as far as how much capital AHT is returning to shareholders annually (at present) it's appoint well made and makes interesting reading!
AHT yield is over 7%
The dividend is about 40p per share
The buyback commitment is £500m per year. With about 480m shares in circulation that's £1 per share or so.
Total £1.40, yield is therefore a little over 7%
Personally I'd rather have the full £1.40 paid out as dividends. Three possible reasons why buybacks are getting most of the money:
1. US shareholders prefer buybacks
2. AHT say the current dividend is intended to sustainable through the cycle, ie it's being kept low in the hope it won't need cutting in the downturn.
3. On current numbers, £500m spent on buybacks saves £10m from the cost of the following year's dividend.
Note that AHT is combining a 7% yield with annual growth of 15-20% under the 2021 plan.
It's interesting to think ahead to where AHT will be when the 2021 plan completes. Growth capex is about £2 per share (new stores + acquisitions) so assuming that they don't immediately launch another five-year plan to double in size again by 2026 (fingers crossed they don't do that!) there could easily be scope to add another £1 to the current payout of £1.40 per share.
Is their debt ratio so unusual for the type of business?
When is the downturn likely to occur? I guess the US trade figures might have spooked some people but generally AHT looks sound enough in the absence of panic selling. A bit of volatility is sometimes an opportunity is it not?
I guess the markets are worried as to how the debt of £3.72 billion is going to be serviced when the inevitable downturn comes.
Just sentiment in a choppy market. Stocks on about 10x earnings now, which is very cheap in my mind. Keep buying!
Is there something I don't know about? Down 4% as I type. Contrary to what I said in my last post, I topped up a bit yesterday, thinking (hoping) that yesterday's fall would be followed by a rise.
I don't mind holding. Money in the bank at almost zero interest is wasted. The div AHT pays is only nominal, but it is still better than nothing. On the other hand, the money in the bank doesn't go down like the value of my AHT shares is.
Perhaps the Trump-China deal has gone bad after all, and while the City knows, the PI doesn't - yet! I hope that's not the case.
Another quarter of exceptional growth, achieving such substantial growth quarter after quarter is incredible. Clearly the company is on a roll and has kept it going by fuelling/funding the strong momentum that has built up. It is showing no signs of abating and looks well placed to maintain the growth into the new financial year.
The same cannot be said of A-Plant in the UK, although its quarterly numbers are encouraging, but whether this is something that it can sustain in the fourth quarter remains to be seen. The company is well placed in the UK market but could do some much better, if only it could gather some of the Sunbelt spirit and open mindedness.
Overall though another first class performance."
Vertikal appears to be a German equipment site. I agree with what they say about A Plant, either AHT needs to appoint a new manager to shake it up or else they should just get shot of it and transfer their primary listing to NYSE.