Broker snap: Ashtead acquisition will give small fillip to earnings

3rd Apr 2012 10:20

Broker Jefferies says the bolt-on acquisition of specialist temperature control equipment rental provider Topp Construction Services has come too late to have much effect on Ashtead's profits for the current financial year, but should provide a small fillip to fiscal 2012/13.For the year to the end of April 2013, Jefferies expects consensus profit before tax and earnings per share consensus forecasts for the plant-hire firm to edge up by 2%.Jefferies rates the stock a "buy" and has a price target of 300p. "While [Ashtead's] valuation is broadly in line with US peers, we note that Ashtead has a stronger balance sheet than its US peers and therefore can self-finance fleet expansion capex [capital expenditure] of twice depreciation over the next 2-3 years and bolt-on acquisitions such as Topp, while maintaining net debt/EBITDA [earnings before interest, tax, depreciation and amortisation] below 2.5x," the broker maintains.JH