Ashtead and Speedy Hire updates to test sentiment in subdued equipment rental sector

Ashtead Group PLC and Speedy Hire PLC are set to release full-year results, providing insights into the equipment rental sector's health. Ashtead's report on June 17 will be scrutinized for its US market performance, particularly regarding construction slowdowns and the impact of interest rates, with analysts forecasting a sales drop to $10.6 billion and adjusted pre-tax profit of $2 billion; attention will also be on capital allocation and the proposed New York listing. Speedy Hire's results on June 18 will focus on stability after a profit warning, with investors seeking progress on cost-cutting measures and updates on rail project delays and key contracts, as sales are expected to rise to £430 million but pre-tax profit remains flat at £5.1 million.

Analysis

The equipment rental sector faces a period of scrutiny, with upcoming full-year results from Ashtead Group PLC and Speedy Hire PLC set to provide crucial health checks amidst challenging market conditions reflected by a moderately negative sentiment. Ashtead, generating 90% of its revenue from its US Sunbelt Rentals business, is contending with a slowdown in US construction activity attributed to higher interest rates, which prompted its third profit warning in December and a downward revision in forecasts; full-year sales are anticipated to fall 4% to $10.6 billion, with adjusted pre-tax profit expected at $2 billion, down from $2.3 billion. Nine-month results to January had already indicated a marginal dip in US revenue to $7.05 billion and lower profit margins. Investors are particularly focused on CEO Brendan Horgan’s outlook for the US market, especially demand tied to hurricane recovery and Inflation Reduction Act projects, and new CFO Alex Pease's plans for capital allocation, with capex guided to $2.6 billion and further cuts anticipated. The company’s high operating and financial gearing, as noted by RBC, amplifies the impact of revenue shortfalls on profitability, and strategic developments such as the Sunbelt 4.0 productivity program and a proposed primary New York listing (shareholder vote expected this month) are also under watch. Meanwhile, UK-focused Speedy Hire, whose shares have been in a prolonged slump, issued a profit warning in February citing delays in National Rail contracts, soft economic conditions, slower retail traction, and a downturn in its Kazakhstan joint venture. Speedy Hire's sales are expected to rise slightly to £430 million, but pre-tax profit is forecast to remain flat at £5.1 million. Key for Speedy Hire investors will be early signs of progress from its Velocity cost-cutting programme, which aims for £3.5 million in annualised savings, and guidance for fiscal year 2026, for which analysts currently model a significant profit uplift to £12 million on a 5% revenue increase.

Key Decisions for Investors

• Closely monitor Ashtead's full-year results against its revised guidance of $10.6 billion sales and $2 billion adjusted pre-tax profit, particularly CEO commentary on US demand drivers and CFO plans for capital expenditure, guided to $2.6 billion.
• Evaluate Speedy Hire's results for tangible evidence of the Velocity cost-cutting program's impact, management's FY2026 profit guidance, and updates on critical contract timelines including National Rail and the Amey agreement.
• Given the subdued sector outlook reflected by moderately negative sentiment and specific company challenges such as Ashtead's high gearing and Speedy Hire's contract delays, maintain a cautious stance on equipment rental investments, awaiting clearer signals on demand recovery and margin stabilization from upcoming earnings.
• Track the shareholder vote on Ashtead's proposed New York listing and progress updates on its Sunbelt 4.0 initiative, as these are significant strategic developments with potential long-term valuation implications.