Ashtead may see USD50m of storm disaster recovery spending and more - Jefferies

Assessing the impact of Hurricane Harvey on Ashtead Group's US-based Sunbelt is difficult, said Jefferies, but the arm could benefit from a sizeable amount of disaster recovery revenue based on previous disasters.

Using Hurricane Sandy as a precedent, Sunbelt may see roughly $50m of immediate disaster recovery rental revenue, equating to about a 2% uplift to the 2018 forecast pre-tax profit of £894m and earnings per share 118.6p.

This does not include rebuild rental work that would be expected over several years and the possibility of the storm being a catalyst for increased US flood defence infrastructure spend.

At this early stage, Jefferies analysts retained their unchanged 2018 estimates but do expect a Harvey update alongside Ashtead's first quarter results on 12 September.

For the quarter, analysts forecast 12% rental revenue growth, of which 14% from volume and a decline of 2% from yield, giving £229.2m PBT and EPS of 30.4p.

It was noted that while Ashtead shares have risen 7.5% over past week, US peers United Rentals was up 12.4% and HERC Rentals up 16.3%.