Ashtead Group PLC (LSE:AHT) is due to report first-quarter results on Tuesday 5 September and, since it has a large and booming US business, is likely to be questioned by investors and analysts about whether migrating its listing from London to New York like several others recently might be a good idea.
Fears about London's status as a financial hub have taken a severe dent this year as many companies have switched allegiance, including fellow building services group CRH, insulation maker Kingspan and several others.
Ashtead is already seen as a FTSE 100 name that is almost a touchstone for the health of the US construction industry if not the wider economy as it owns the leading rental equipment hire business Sunbelt Rentals operations, which are also a major player in the UK.
Earlier this year Ashtead pledged to keep its London listing, even though it generates the bulk of its revenues in the US and is expected to benefit from President Biden’s Inflation Reduction Act.
Chief executive Brendan Horgan, an American himself, said the group's stock market listing was “a topic that the board periodically takes under review and our position remains to be a FTSE constituent”.
Bulk of revenue is from US
Ashtead last year made US$8.2 billion of revenue in the US, US$822.8 million in the UK and US$622 million in Canada.
This meant the US represented roughly 85% of group revenue and over 90% for all of North America, with the UK 8.5%.
CRH, which generated about 75% of its core earnings in the US, said moving to the US would benefit the company by making it easier to win places on large US government spending programmes and open up tax advantages in future mergers and acquisitions.
"We see significant benefits by representing ourselves to be truly an American company," CRH boss Albert Manifold said.
It seems like it could be only a matter of time before Ashtead decides the same.
What else to expect from results?
Ashtead's Horgan offered full-year guidance for organic sales growth of 13% to 16%, based on the expectation of increases of 15% to 20% in Canada, 13% to 16% in the USA and 10% to 13% in the UK.
City analysts currently expect total sales growth for the year of 13% to US$11 billion and pre-tax profit up 14% to US$2.5 billion.
Last year in the first quarter the company reported sales of US$2.3 billion and profit of US$527 million.
Bolt-on acquisitions are also under the microscope for Ashtead, which spent around US$1.2 billion on 50 bolt-on acquisitions in 2023.
Shares in Ashtead rose over 250% between the start of 2019 and the end of 2022 but are down since, despite rising by a quarter over the past year.
This recent climb comes "as markets convince themselves that America’s economy will dodge a soft landing, let alone a hard one, and keep growing," said analysts at AJ Bell.
Though Ashtead is seen as a litmus test of the US economy, the analysts noted that the share price does look a bit brighter than recent PMI surveys suggest.
"For all of that, Ashtead spent all of its fiscal year to April 2023 raising sales growth and earnings guidance, not lowering it. This has helped the share price and it is by the guidance for the year to April 2024 by which this first-quarter update will be measured."