Ashtead Group
Headquarters: London, England
Founded: 1947
Ashtead Group is a leading international equipment rental company, providing an extensive range of industrial and construction equipment to businesses and individuals. Operating primarily under the Sunbelt Rentals brand throughout the United States, Canada, and the UK, Ashtead serves a wide variety of industries, including construction, manufacturing, infrastructure, and event management. The company’s inventory includes everything from aerial work platforms, forklifts, and earthmoving equipment to smaller tools and climate control systems. This may not be a particularly exciting business, but its attractive unit economics and secular growth trajectory – as companies are increasingly renting rather than owning equipment – means this has been a great stock to own for many years, and we believe will continue to be such.
“Ashtead serves a wide variety of industries, including construction, manufacturing, infrastructure, and event management. ”
Founded in 1947 in the United Kingdom, Ashtead initially focused on plant hire services, primarily serving the UK market. Over the decades, the company steadily grew through organic expansion and strategic acquisitions, eventually entering the North American market, which has since become its primary driver of growth. The pivotal moment in Ashtead’s history came with its acquisition of Sunbelt Rentals in 1990. This move allowed the company to establish a significant foothold in the U.S., a market that now accounts for the lion's share of its revenues and profits. The North American equipment rental market is not only larger than the UK’s but also offers higher growth potential due to the broader adoption of the rental model across industries. Ashtead's subsequent investments in the U.S. have been instrumental in its transformation into one of the world’s largest equipment rental companies. Today, while its roots are firmly in the UK, Ashtead is predominantly a North American-focused business.
A significant aspect of Ashtead’s appeal lies in its consistently strong returns on invested capital. Ashtead is able to purchase equipment at a discount from original equipment manufacturers since the company is often a very important customer for these manufacturers. It is able to generate approximately $60 a year in rental revenue for every $100 invested in equipment, at a 45-50% profit margin, and is often able to sell the equipment six or seven years later for some 35% of the original purchase price. This represents a 22% pre-tax return on investment, which is very attractive. Moreover, Ashtead’s decentralized branch structure, where individual locations cater to the specific needs of their local markets, enhances customer satisfaction and operational flexibility. Furthermore, Ashtead has effectively leveraged technology and data analytics to optimize its fleet utilization, pricing strategies, and customer relationships, reinforcing its competitive advantage.
“Today, while its roots are firmly in the UK, Ashtead is predominantly a North American-focused business.”
Looking ahead, while near-term trading has been subdued due to a slow non-residential construction market in the US, Ashtead's medium- and long-term growth prospects remain robust. Projects involving roads, bridges, energy infrastructure, and urban development are expected to drive strong demand for rental equipment. There continues to be a trend of US companies increasingly renting equipment from the likes of Ashtead or United Rentals, rather than buying equipment themselves. Ashtead is well-positioned to capture these opportunities due to its experienced and capable management team, extensive depot network, and strong financial position, which enables continued investment in its fleet and branch expansion. Additionally, the company’s strategy of acquiring smaller regional players allows it to grow its market share while maintaining operational efficiency. A potentially transformative development for Ashtead is its upcoming U.S. listing, scheduled for March 2026, following shareholder approval of a scheme of arrangement in June this year. This move aligns its equity market with its primary operating base and could enhance the rating of its shares. In the business of equipment rental, scale matters a lot: it is the key to driving equipment utilisation and securing good terms from the equipment manufacturers, and Ashtead’s strong #2 position means it, alongside United Rentals, should continue to capture market share in this structural growth market. Combining these strong unit economics with a long growth trajectory into the future means that Ashtead ought to continue to be a good stock for a long time to come.
