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Ashtead (ASHTY) FY24 Revenue Forecast Down, Shares Fall
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Ashtead Group (ASHTY - Free Report) revealed that its second-quarter fiscal 2024 (ended Oct 31, 2023) revenues will be lower than expected due to fewer-than-normal natural disasters, which impacted demand for its services. The Hollywood writers’ strike has hurt its film and television business in Canada. ASHTY’s shares dipped 9.77% on the news.
The company will announce second-quarter fiscal 2024 results on Dec 5, 2023. Ashtead now expects year-over-year rental revenue growth of 13% in the six months ended Oct 31, 2023. Compared with the base of rental revenues of $4.38 billion reported in the comparable period last year, this suggests revenues of $4.95 billion.
EBITDA is projected to be around $2.58 billion, highlighting year-over-year growth of 15% from $2.25 billion in the prior-year comparable period. Adjusted profit before taxation is expected to be around $1.31 billion. This suggests 5% year-over-year growth, which is expected to be driven by the benefits from the company’s Sunbelt 3.0 strategic growth plan.
Ashtead rents out equipment under the name Sunbelt Rentals, which is used by the construction industry for clean-up operations after natural disasters in the United States. The company witnessed muted demand in the later part of the second quarter due to fewer hurricanes compared with recent years as well as less instances of wildfires.
The company also provides specialist equipment to the film industry. The Writers Guild of America and Screen Actors Guild strikes that have been in effect since May 2023 have been impacting the performance of ASHTY’s Film & TV business, with some impact on the rest of the Canadian business. Following a tentative agreement, union leadership voted to end the strike on Sep 27, 2023. This is expected to weigh on the company’s results in the period under discussion.
FY24 Guidance
Taking into account the above-mentioned headwinds, the company has revised full-year revenue guidance and earnings expectations.
ASHTY now expects both the Group’s and U.S. rental revenue growth to be in the range of 11% to 13%. The company had earlier expected both to be in the range of 13% to 16%. Despite the lowered expectations, the company still expects to achieve record results.
The company also expects a full-year depreciation charge of $2.1 billion and a net interest cost of $540 million. EBITDA is expected to be 2% to 3% below current market expectations.
The Zacks Consensus Estimate for revenues for fiscal 2024 is $11.13 billion, suggesting 19% growth. Earnings per share are $17.64 (14.25% year-over-year growth) and EBITDA projection is $5.1 billion (16% year-over-year growth).
Despite the setback from lower natural disasters in the current fiscal, the company stated that end markets in North America remain robust, supported by the increasing number of mega projects and recent legislative acts.
Price Performance
In the past year, Ashtead’s shares have gained 10% compared with the industry’s 12% growth.
Alamo has an average trailing four-quarter earnings surprise of 19.8%. The Zacks Consensus Estimate for ALG’s fiscal 2023 earnings is pegged at $11.59 per share, which indicates year-over-year growth of 34.5%. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. Its shares have gained 24% in the past year.
The Zacks Consensus Estimate for Flowserve’s fiscal 2023 earnings per share is pinned at $2.01, indicating growth of 83% from the prior-year actual. Earnings estimates have moved 2% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 27.3%. FLS shares have gained 20% in the past year.
A. O. Smith has an average trailing four-quarter earnings surprise of 14%. The Zacks Consensus Estimate for AOS’ 2023 earnings is pegged at $3.75 per share. The estimate projects year-over-year growth of 19.4%. Earnings estimates have gone up 4.5% in the past 60 days. AOS shares have gained 23% in the last year.
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Ashtead (ASHTY) FY24 Revenue Forecast Down, Shares Fall
Ashtead Group (ASHTY - Free Report) revealed that its second-quarter fiscal 2024 (ended Oct 31, 2023) revenues will be lower than expected due to fewer-than-normal natural disasters, which impacted demand for its services. The Hollywood writers’ strike has hurt its film and television business in Canada. ASHTY’s shares dipped 9.77% on the news.
The company will announce second-quarter fiscal 2024 results on Dec 5, 2023. Ashtead now expects year-over-year rental revenue growth of 13% in the six months ended Oct 31, 2023. Compared with the base of rental revenues of $4.38 billion reported in the comparable period last year, this suggests revenues of $4.95 billion.
EBITDA is projected to be around $2.58 billion, highlighting year-over-year growth of 15% from $2.25 billion in the prior-year comparable period. Adjusted profit before taxation is expected to be around $1.31 billion. This suggests 5% year-over-year growth, which is expected to be driven by the benefits from the company’s Sunbelt 3.0 strategic growth plan.
Ashtead rents out equipment under the name Sunbelt Rentals, which is used by the construction industry for clean-up operations after natural disasters in the United States. The company witnessed muted demand in the later part of the second quarter due to fewer hurricanes compared with recent years as well as less instances of wildfires.
The company also provides specialist equipment to the film industry. The Writers Guild of America and Screen Actors Guild strikes that have been in effect since May 2023 have been impacting the performance of ASHTY’s Film & TV business, with some impact on the rest of the Canadian business. Following a tentative agreement, union leadership voted to end the strike on Sep 27, 2023. This is expected to weigh on the company’s results in the period under discussion.
FY24 Guidance
Taking into account the above-mentioned headwinds, the company has revised full-year revenue guidance and earnings expectations.
ASHTY now expects both the Group’s and U.S. rental revenue growth to be in the range of 11% to 13%. The company had earlier expected both to be in the range of 13% to 16%. Despite the lowered expectations, the company still expects to achieve record results.
The company also expects a full-year depreciation charge of $2.1 billion and a net interest cost of $540 million. EBITDA is expected to be 2% to 3% below current market expectations.
The Zacks Consensus Estimate for revenues for fiscal 2024 is $11.13 billion, suggesting 19% growth. Earnings per share are $17.64 (14.25% year-over-year growth) and EBITDA projection is $5.1 billion (16% year-over-year growth).
Despite the setback from lower natural disasters in the current fiscal, the company stated that end markets in North America remain robust, supported by the increasing number of mega projects and recent legislative acts.
Price Performance
In the past year, Ashtead’s shares have gained 10% compared with the industry’s 12% growth.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Ashtead currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Alamo Group (ALG - Free Report) , Flowserve (FLS - Free Report) and A. O. Smith (AOS - Free Report) . ALG and FLS sport a Zacks Rank #1 (Strong Buy) at present, and AOS has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Alamo has an average trailing four-quarter earnings surprise of 19.8%. The Zacks Consensus Estimate for ALG’s fiscal 2023 earnings is pegged at $11.59 per share, which indicates year-over-year growth of 34.5%. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. Its shares have gained 24% in the past year.
The Zacks Consensus Estimate for Flowserve’s fiscal 2023 earnings per share is pinned at $2.01, indicating growth of 83% from the prior-year actual. Earnings estimates have moved 2% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 27.3%. FLS shares have gained 20% in the past year.
A. O. Smith has an average trailing four-quarter earnings surprise of 14%. The Zacks Consensus Estimate for AOS’ 2023 earnings is pegged at $3.75 per share. The estimate projects year-over-year growth of 19.4%. Earnings estimates have gone up 4.5% in the past 60 days. AOS shares have gained 23% in the last year.