Ashtead Earnings: Strong Rental Revenue Growth Underpinned by U.S. Legislation

No-moat Ashtead reported first-quarter rental revenue growth of 14% year over year, tracking in line with its unchanged full-year guidance of 13% to 16%. Strong demand is underpinned by recent U.S. legislation, which has led to several large infrastructure and commercial projects requiring rental equipment. Strong demand has resulted in increased rental rates, supporting first-quarter EBITDA growth of 18%. The capital intensity of the business is reflected by more than $1 billion capital expenditure during the quarter, which resulted in free cash outflow of $139 million as incremental fleet investments are required for the business to grow. We maintain our GBX 4,350 fair value estimate and view shares as fairly valued.