Grafton stock rises following solid 2024 results

Investing.com -- Shares of Rentokil (LSE:RTO) dropped 3% following the release of its full-year 2024 financial results.

The company’s performance revealed a mixed picture, with North America profits slightly exceeding expectations, but weaker international trading and a free cash flow (FCF) miss contributed to the stock’s decline.

Rentokil’s second-half profits in North America were approximately 3% above projections, but this was overshadowed by lower-than-expected trading in international markets, with earnings before interest, taxes, and amortization (EBITA) coming in line overall due to reduced central costs.

The fourth quarter saw group organic growth of 2.8%, yet both Europe & Latin America and the UK underperformed. Despite these setbacks, the overall profit before tax (PBT) for the full year aligned with forecasts.

A notable area of concern was the company’s free cash flow, which fell around 10% short of estimates at £410m, primarily due to a higher working capital outflow. Net debt ended up £146m higher than anticipated at £3.2bn, resulting in a leverage ratio of 2.9 times, slightly above the estimated 2.8 times.

Consequently, Rentokil has adjusted its free cash flow conversion expectation for 2025 to 80%, down from a previously modeled 92%.

In response to these challenges, Rentokil is making strategic changes, including a renewed focus on customer retention and a revised brand strategy that will maintain nine specific regional core brands alongside Rentokil and Terminix.

The company also plans to increase its branch network, adding 100 branches to the original target of 400, which will result in a post-integration network of 500 branches. This expansion includes keeping some branches open that were slated for closure and opening new small satellite branch locations, with 10 already piloted and 22 operational.

Despite the financial miss, Rentokil anticipates its profit before tax for FY25 to meet market expectations, which currently stand at £734m.

Barclays commented on the strategic updates, stating, "Our view - these are all positive developments."

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Investing.com -- Games Workshop Group PLC (LSE:GAW) shares climbed 7% following the company’s announcement that trading in January and February performed above expectations.

The robust performance across its core business and licensing segments has led the firm to predict that its profit before tax (PBT) for fiscal year 2025 will surpass prior forecasts, though no additional details were disclosed.

The update comes shortly after the company reported its interim results on a January 14, signaling a continuation of positive momentum. Games Workshop’s first half of the fiscal year showcased a strong outcome, with a revenue increase of 16% and a profit rise of 22% compared to the same period last year.

This performance was particularly noteworthy given it was achieved against challenging comparisons from the previous year’s success of its Warhammer 40,000 product line.

Jefferies, a global investment banking firm, commented on the news stating, "While clearly a positive that this is being signalled just weeks after the interim results (14 January), we expect it will come as little surprise with many having viewed consensus FY25 expectations as having been pitched too conservatively in light of the strong ’Space Marine 2’-led H1 result.

The most encouraging element from our perspective is the recognition of continued strong trading in the core business after the outstanding H1 result (revenue +16%, profit +22%) that was delivered against tough 40k comps. The shares have had a very good run (1yr +48%) but continue to justify a premium multiple with upgrades."

The company’s share price has seen a significant increase over the past year, rising by 48%, and the recent announcement is expected to further cement its standing in the market.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Investing.com -- Shares of BAWAG (VIE:BAWG) Group AG (VSE:BG) fell by 1.7% in today’s trading session, despite the company reporting overall revenues that were 6% higher than analyst expectations.

The dip in the stock price may be attributed to costs that were approximately 10% above the consensus forecasts.

The financial institution’s net interest income (NII) outperformed consensus estimates by 5%, but this was offset by a 3% underperformance in fees. The fourth quarter saw net write-backs of €1.4 million, due to the release of an overlay, which led to an 18% beat in profit before tax (PBT) against consensus estimates.

BAWAG’s CET1 ratio, a key measure of financial strength, stood at 15.2%, which was 29 basis points better than the consensus estimate. However, investors may have been concerned by the projected fully phased CET1 ratio for the fiscal year 2024, which at 13.8% fell short of the >14% guidance provided at the end of the third quarter.

Additionally, the company announced a fiscal year 2024 dividend per share (DPS) of €5.50, which surpasses the Visible Alpha consensus DPS estimate of €5.19. Despite the positive news on revenues and dividend, the higher-than-anticipated costs and the lower projected CET1 ratio seem to have weighed on investor sentiment.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Investing.com -- Shares of Inchcape (OTC:INCPY) (LSE:INCH) rose 3.5% today following the company’s announcement of a new £250 million share buyback program.

The automotive distributor and retailer’s move comes on the heels of a recently completed £150 million return to shareholders, highlighting its robust cash generation capabilities.

Inchcape’s full-year 2024 earnings per share (EPS) are reported to align with the company-compiled consensus. However, its trading commentary suggests that consensus profit before tax (PBT) estimates might decrease by approximately 5% for FY25E due to mixed trading in the Asia-Pacific region continuing into early FY25E.

This potential decline is anticipated to be partially mitigated by lower interest costs. Despite the mixed trading outlook, the company’s buybacks are expected to keep consensus EPS broadly stable.

The company’s profitability is forecasted to be more heavily weighted towards the second half of FY25E, driven by product cycles and the ramp-up of new contracts. Additionally, Inchcape has revised its capital allocation policy to focus more on ongoing share buybacks rather than mergers and acquisitions, which is seen as a strategic move considering the company’s current low valuation multiple.

Jefferies, a brokerage firm, commented on Inchcape’s financial targets and valuation, stating, "We argue that new medium-term annual targets (to 2030) — 3-5% organic growth, c.6% margins, 25-30% ROCE, £2.5bn free cash flow (FY25E-FY30E); 10% compound EPS growth — are yet to be reflected in currently low valuation: FY25E: 8.5x P/E, 4.7x EV/EBITDA, 13.4% FCF yield, 4.5% dividend yield."

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Investing.com -- Abrdn PLC (LON:ABDN) reported stronger-than-expected annual profit on Tuesday as CEO Jason Windsor outlined a strategy update, including a goal to boost profit by at least 18% within two years.

The asset manager posted an adjusted operating profit of £255 million ($324 million) for the year, a 2% increase from £249 million in the prior period. The result slightly exceeded analyst expectations, which averaged £249 million, according to company-compiled estimates.

Abrdn also declared a dividend of 14.6 pence per share.

The company’s shares jumped 12% in London trading by 08:32 GMT.

Looking ahead, the company updated its financial targets for fiscal 2026, citing growing momentum. It now aims for an adjusted operating profit of at least £300 million and net capital generation of around £300 million.

"We believe none of our businesses is yet operating at its full potential, despite 2024 having been a year of progress and positive realignment," Chief Finance Officer Ian Jenkins said.

In its interactive investor division, the company is targeting annual customer growth of 8%, while its Adviser business aims to generate at least £1 billion in net inflows by 2026.

For the second half of 2024, Abrdn’s operating profit exceeded company-compiled consensus by 5%, driven by in-line revenues and slightly adjusted operating expenses 1% better-than-expected.

Adjusted profit before tax (PBT) came in 14% above consensus, benefiting from significantly higher net financing and investment returns.

JPMorgan analysts said they believe the operational beat in the second half and the "ambitious" targets for 2026 will be "well-received" by investors.

Separately, Morgan Stanley analysts said they also expect a positive reaction, "though 2026 improvement looks somewhat dependent on improving top line and Investments profitability."

Alongside its earnings release, Abrdn announced it would revert to using "Aberdeen" as its primary trading name, reversing a controversial 2021 rebrand that removed vowels from its name. The previous change from Aberdeen Standard Life to "abrdn" was widely criticized in the media.

The company also revealed plans to begin searching for a new chairperson, with Douglas Flint set to step down. "With a board refresh also completed last year, it is now an appropriate time to commence the search for my own successor," Flint said. Senior independent director Jonathan Asquith will oversee the process.

Investing.com -- Ashtead Group (LON:AHT) has reported third-quarter results on Tuesday that were broadly in line with expectations, with strong cost control helping to offset challenges in certain markets.

As per analysts, the company’s overall EBITA performance was in line with forecasts, though there was a notable beat in US margins.

Adjusted EPS came in 1% ahead of consensus. Guidance remains unchanged, and full-year earnings per share estimates for 2025 have been maintained, while 2026 estimates were slightly reduced due to weaker performance in Canada and the UK.

US rental revenue grew by 1% in the third quarter, aligning with Barclays’ estimates and previous guidance.

The strength of mega projects and hurricane response efforts offset lower activity in local commercial construction.

General tool rental declined by 2% year-over-year, while specialty rental increased by 10%. Despite slower sequential growth, US EBITDA outperformed estimates by approximately 2%, with a margin expansion of around one percentage point.

Cost control played a significant role in this outcome, contributing to a 71% year-to-date drop-through rate.

In Canada, EBITDA fell $20 million short of Barclays’ expectations, prompting a downward revision in revenue guidance.

J.P. Morgan attributes the weaker performance to slower-than-expected progress in the Film & TV business.

However, at the group level, the impact of Canada’s underperformance was limited, keeping overall group EBITDA and EBITA in line with forecasts.

Free cash flow reached $858 million in the first nine months, and net debt declined to $10.6 billion from $11.2 billion a year ago. Net debt to EBITDA now stands at 2.1x on a constant currency basis.

US capital expenditures have decreased by 52% year-over-year, with the company reallocating existing fleet capacity rather than expanding aggressively.

The group continues to guide FY25 rental revenue growth at 3-5%, with regional expectations as follows: US rental revenue growth at 2-4% (unchanged), Canada at 9-13% (previously 15-19%), and UK at 3-6% (unchanged).

Gross capex is projected between $2.5 billion and $2.7 billion, with FCF expected to be around $1.4 billion.

For the fourth quarter, Barclays has made minimal changes to its estimates, continuing to model flat rental revenue growth.

While Ashtead’s current trading trends appear weaker than those reflected in United Rentals (NYSE:URI) and Herc Holdings (NYSE:HRI) guidance for FY25, Barclays attributes this to differences in business mix rather than a loss of market share for Ashtead’s Sunbelt division.

“On the guided framework, we would expect a 1-2% reduction in consensus adj. PBT/ adj. EPS forecasts for FY25 where some forecasts remain stale,” said analysts at J.P. Morgan.

However, both Barclays and J.P. Morgan have left their FY25 revenue, adjusted EBITDA, and EPS forecasts unchanged, in line with company guidance.

Barclays maintains an “overweight” rating on Ashtead Group, with a positive outlook for the European business services sector.

The price target remains at 6,600 GBp, representing a potential upside of 37.5% from the latest trading price of 4,799 GBp. No updates have been provided on the previously announced US listing plans.