When America builds, Ashtead Group PLC (LSE:AHT) booms. But with confidence ebbing in the world’s largest rental market, the Sunbelt Rentals owner is finding the gears harder to shift.
RBC Capital Markets has taken a slightly dimmer view ahead of Ashtead’s second-quarter results next month, trimming its earnings forecast for the 2026 financial year by 2.7% and making only a token cut for 2027.
The analysts, Karl Green and Andrew Brooke, have kept their “underperform” rating and 4,600p price target, leaving the shares (which closed at 4,790p) looking fairly fully valued.
The bank’s caution rests on a familiar mix of pressures. Overcapacity in the wider equipment market has dragged on pricing, while second-hand machinery values remain weak.
Cost inflation and a stronger dollar are squeezing margins, and a higher effective tax rate adds another turn of the screw.
At the same time, competition from the privately owned EquipmentShare is intensifying, particularly in the mid-sized customer segment where Sunbelt’s “Local” business once thrived.
Ashtead’s fundamentals still inspire respect. The company remains the second-largest player in the US rental market and has long benefited from the shift towards hiring rather than owning kit, a trend that has years left to run.
RBC expects modest revenue growth of 1.5% next year, accelerating to 5.4% in 2027, with margins recovering to more than 25% by 2028. Yet with the shares on roughly 18 times forward earnings, much of that promise already appears reflected in the price.
The analysts’ base case assumes an enterprise value to EBITDA multiple of six times and long-term growth of 3%, leaving little headroom if the US construction cycle continues to cool.
Their downside scenario (a valuation of around 3,275p) reflects an earnings multiple at the lower end of Ashtead’s historical range.
For now, the group’s scale, balance sheet discipline and ability to wring efficiencies from its network keep it on the front foot. But until Washington’s policy signals become clearer and US builders regain their nerve, Ashtead may have to settle for ticking over rather than powering ahead.