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UK growth data to be a focus, while Ashtead's interims will offer US construction health-check

Tuesday is also short-term indicator day with the release of UK trade data, and industrial and manufacturing production figures

Ashtead Group - Build up or slowdown for Ashtead?

Tuesday is poised to be a relatively quiet day for company news in London, although there will be plenty of economic data and continued general election speculation to provide a focus.

UK gross domestic product (GDP) growth figures, along with industrial and manufacturing production and trade data for October are all due mid-morning, though they are unlikely to shake the market as they usually would, considering the political focus two days ahead of elections.

If they do, it may mark a downward turn, with analysts expecting a dip in manufacturing production and construction output, offset by a small rise in the larger services sector, with consensus forecast sitting at 0.1% monthly growth, which would leave three-month growth also at 0.1% compared to the previous period.

Investors might be able to contrast the UK data with half-year results from US-focused equipment hire firm Ashtead Group PLC’s (LON:AHT) which could provide something of a health-check for the US construction and manufacturing, like plumbing equipment peer Ferguson PLC (LON:FERG) last week.

Shares in the FTSE 100-listed Ashtead, which rents out equipment from diggers and cranes to pumps and heating equipment, have been flying close to year-highs of 2,462p recently, as investors have shut their eyes to worrying signs of an industry slowdown in the US.

Manufacturing sector data in the US has been falling recently, and what’s more, the latest figures from the US commerce department revealed a drop of 0.8% in construction spending in October, which suggests tougher times for Ashtead, since 90% of its sales come from its US-based Sunbelt operation.

With its shares up more than 40% this year, “investors had better be right,” said AJ Bell’s Russ Mould, “because if they are wrong and a slowdown or recession comes around the corner that could leave Ashtead’s shares pretty exposed”.

Back in September, Ashtead’s overall revenues rose 17% but statutory profit before tax was up only 8%, the slowest rate of improvement since early 2017. In the first quarter of the current year, organic rental revenues were up 12%, softening from the 15% in the second half of last year.

Peel Hunt analysts have noted that last year’s second-quarter revenues, against which this year’s will be compared, got a modest US$15-20mln boost from higher-margin clean-up work created by Hurricane Florence in US.

“The investor focus is likely to be on the outlook and if management chooses to be more selective re Sunbelt US fleet expansion (currently $1.0-1.1bn),” the analysts said.

Significant announcements expected on Tuesday:

Trading announcements: Ashtead Group PLC (LON:AHT), S & U PLC (LON:SUS)

Finals: Driver Group PLC (LON:DRV), Nexus Infrastructure PLC (LON:NEXS), Oxford Biodynamics PLC (LON:OBD), RWS Holdings PLC (LON:RWS)

Interims: Begbies Traynor Group PLC (LON:BEG), Mind Gym PLC (LON:MIND), Photo-Me International PLC (LON:PHTM)

AGMs: Ashley House PLC (LON:ASH), Bellway PLC (LON:BWY), Upland Resources Limited (LON:UPL)

Economic data: UK GDP reading, UK industrial production, UK manufacturing, UK construction orders, UK balance of trade

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