Shares in equipment rental company Ashtead AHT are down this morning on a profit warning, but its decision to exit the FTSE 100 in favor of a US listing is what has really raised eyebrows.
Ashtead was originally founded in the UK, but its sizeable US operations, which trade under the moniker Sunbelt Rentals, mean that it is the second-largest rental equipment provider in the US.
This morning the company said it was abandoning its UK origins for a more favorable business environment stateside.
Matthew Donan, senior equity analyst at Morningstar, says at first glance the move makes sense.
“The news isn’t surprising given that Ashtead earns over 90% of its revenues from the US,” he says.
“Speculation of a US listing has been ongoing and makes logical sense for the business given its geographic mix.”
In a statement, Ashtead said it would complete a formal shareholder resolution before implementing the decision within two years.
“Today Ashtead is substantially a US business, reporting in US dollars, with almost all the Group’s operating profit (98% at full year 2024) derived from North America, which is also the core growth market for the business,” it said.
“Over the coming weeks, we will discuss this proposal with shareholders before putting forward a formal resolution for approval for a move to a US primary listing at a general meeting in due course. The Board expects that the necessary steps would be implemented over the next 12 to 18 months.”
The decision makes Ashtead the latest UK business to shun its London listing.
Cloud computing firm Endava DAVA, chipmaker Arm ARM, building materials company CRH CRH, betting group Flutter Entertainment FLTR, travel operator Tui TUI1, and fast food technology platform Just Eat Takeaway JET, have all ditched London listings for other locations.
Challenger bank Revolut and buy-now-pay-later credit provider Klarna are also now likely to swerve London flotations.
Ashtead’s Shares Are Still Trading Above Their Morningstar Falue Value Estimate
Source: Morningstar Direct
Key Morningstar Metrics For Ashtead AHT
• Morningstar Fair Value Estimate: £53.00
• Morningstar Rating: 2 Stars
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Medium
• Sector: Industrials
Ashtead’s news comes amid a profit warning announced in a separate statement to markets this morning.
“Principally as a result of local commercial construction market dynamics in the US, we now guide to Group rental revenue growth for the full year in the range of 3-5% and hence, full year profit lower than our previous expectations,” it said.
Ashtead will now commence a share buyback programme over the next 18 months.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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