Shares in equipment rental company Ashtead are +3% in early morning trading after the company beat market’s consensus expectations, growing Q1 underlying rental revenue +19% YoY and pre-tax profit +23% thanks to strong market demand for tool rentals and weaker GBP (Cable is down 9% this year).

In further benefit to shareholders, Ashtead announced improvements to its share buyback programme, increasing quarterly outlays to £125m for a total of £675m. Lastly, the company raised guidance by saying that full-year results should be ahead of expectations. Strong quarterly results, generous shareholder returns and a bright future outlook presented a veritable trifecta of delightful news for Ashtead shareholders.

Much of the company’s revenues come from the US and Canadian markets and the recent boom in US economy boosted demand for rentals, while Canadian business primarily grew thanks to aggressive M&A efforts (tripling in size to £44.4m). Ashtead’s UK business remained a laggard due to the competitive landscape, with revenue growing just 5.7% YoY, however, since it makes up just 12% of group revenue, its impact on the bottom line was minimal.

With the storm season in full swing in the US and Hurricane Florence set to hit the Eastern Seaboard and the Carolinas, demand for Ashtead’s rental equipment is expected to increase to facilitate weather defence and clean-up efforts. Which means that the company’s positive outlook for the remainder of the year appears justified.

Artjom Hatsaturjants, Research Anlyst, 11 September 2018