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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.
LM
"Vertikal Comment
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."
https://www.vertikal.net/en/news/story/32458/
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.
The fall is just profit taking as the SP has risen 23% in the last three months. Nothing wrong with the results. Wouldn't be surprised to see them up by the end of the session..
"Equipment rental firm Ashtead tumbled 2.8 percent despite a surge in quarterly earnings, with a trader saying the fall was due to the company failing to upgrade its full-year forecast."
Such a good company, such health in each area of its results, and still the market is not happy. I'm holding. I'd buy more but I'm already a bit heavy in this.
Volcano, i seem to remember around 20p when I first bought in but that may say more about my memory than the company. Nevertheless , great results which are not good enough for the market today. Need to move to NYSE and sell UK company to get the rating this deserves.
good results , AHT used to trade at £1 ten years ago. not bad going.
Ashtead explained the buybacks some time ago. They said that ownership of the equity is split equally between US and UK investors. In the US they hate dividends and love buybacks, in the UK they hate buybacks and love dividends. Hence shareholder returns are made using both methods.
Will Ashtead Group get a (fork)lift following Tuesday’s third quarter trading statement?
While it might have come during a tough December, there was a lot to recommend in the month’s half year results. Revenue rose 19% to £2.25 billion, with a 25% surge in pre-tax profit to £610 million, and a stonking 42% jump in underlying earnings to 98.8p per share.
If Ashtead is to continue its 2019 recovery, then Tuesday’s Q3 results need to maintain that double-digit growth posted in the first and second quarters. The performance of its US division, which makes up something like 85% of its total revenue, will be key, with the company susceptible to any stateside economic slowdown.
Read what Spreadex analysts have to say, or watch a 60 second earnings preview video, here: https://spreadex.com/?tid=387818
Damning criticism of share buybacks in the Sunday Telegraph today. They line the pockets of underperforming boards. The effect is mainly to enrich top management because it makes their bonus targets easier to hit.
It also limits the amount spent on R&D particularly by pharmaceutical companies. US law makers call it 'Corporate Cocaine'
Tango Man LOL. Yes we're being Tango'ed by the old buffer.
CAT are going to be increasing their costs 1%-4% on construction plant due to increased costs of production (they can thank the Tango man in the big White House for that eh!).
So, could be an opportunity for AHT to increase margins or increase market share.........it will no doubt entice more to rent than buy irrespective of what AHT do.
DD
I believe that they are forced to buy back consistently. Remember, the Company are (obviously) insiders, and hence any hint of 'trading' is likely to be viewed with suspicion by the regulator.
OK, so they buy back every day. If they had a crystal ball they could get it right. But they don't, so sometimes it's right others not so much.
Hi Matt, wouldn’t disagree. My only gripe is they basically buy back every day no matter what the share price. Buying when this was at it’s all time highs, like any share purchase, is not the best way to maximise returns. Perhaps they do try and buy more when there are dips compared to peaks I don’t know I haven’t looked at the buybacks in detail. Have no firm view on buybacks one way or another really although there are some that contend that AHT could be reducing debt a bit more and increasing dividends, but it’s horses for courses IMO.
Thanks Dave - in truth I would be more cynical here, and say that management like buybacks because it tends to increase EPS, which most of them are measured and paid against, as opposed to dividends. However, given that I also would prefer to see my returns through share price appreciation rather than dividend growth, I am aligned with their position and hence very happy to support. ERR simply compares the Return on actual equity (in Balance sheet) versus the return on the markets view on equity (ie market cap). In effect, I think it's saying do buy backs when the stock is at a discount to book value, and stop when it's the same?
Couple of things Dubs - Strangely, I am aware of the tax free structures you mention but (and I don't mean to boast) I have also used my full allowance for the last 15 years or so, but still have the majority of my investments out side of these structures. Secondly, I don't doubt your last sentence, but in all honesty, retail investors are by in large poorly informed and extremely naïve. Having been a professional investor for much of my career, I feel my handle on this issue is better. Perhaps you might explain in detail why you think share buybacks are a bad idea for a company whose return on equity exceeds cash interest rates.
Matt. There is no need to pay taxes on dividends. For the past 20 years I have invested through first PEPs and now ISA self select platforms where you don't pay taxes.
I think you will find that most retail investors are with me on the futility of share buybacks
Hmmm.. in the first para he says buy backs are not a share price support strategy.
In the next para he suggests they are!
His 'rules' are interesting and make sense. Has AHT been following them? Their consistent rate of buy backs and performance WRT debt appears to support the idea rather than otherwise.
Hi Matt
I do question them buying back shares at all time highs though and they should be buying proportionally more now when the share price IMO is undervalued. Lord Wolfson (Next) is regarded as the pioneer of maximising buybacks (see link) and I do wonder if AHT are following his rules, especially making sure that the equivalent rate of return is greater than any other investment opportunity (acquisitions etc). That said I believe a lot of US investors like buybacks more than those in the UK so that may also be a reason here.
http://www.hollandadvisors.co.uk/cms/resources/lord-wolfsons-wisdom-on-share-buybacks.pdf
DD
Sorry mate, but your comments about dividends and buybacks below show a very poor understanding. Firstly, companies that are growing fast like AHT have high retained earnings as they need the cash to reinvest, hence funds for divvys and buybacks tend to be lower. Secondly, ignoring tax effects, a buy back is economically identical to you receiving the dividend and then reinvesting back into the stock. However, the tax regime tend to favour the buyback, and hence that's one reason they do it. the other reason is that it increases EPS as the bought shares are then cancelled which lowers the number of shares used in the EPS calculation.
Finally, on the dividend vs share buyback, I am taxed on dividends at 45%, but pay only 20% on Capital gains, and even then , only if they exceed the allowance of ?11.7k or so. Hence for me, and any higher rate tax payers, a buyback is a far more efficient use of excess cash than a dividend.
I agree with you that the share buy back should stop and the money used to reduce the debt.
Still, I think there is plenty of value to be had here but over what time scale is anyone’s guess.
There was a share buyback yesterday. I guess they just paused for the hols.
I don't see this as a sinking ship - just battered by the slings and arrows of the outrageous fortune that gave the the current inhabitant of the White House. His successor will probably want it fumigated, not least to get rid of the bugs in the walls. On 2nd thoughts don't mention the wall.
When you make a crappy businessman president you get crappy business.
Are they all abandoning the sinking ship?
First Geoff Drabble, now Ian Sutcliffe.
On the positive side, I note there have been no share buybacks since the 20th December. One can only hope they have come to their senses.