Ashtead Technology Delivers: Margins Beat, Balance Sheet Strengthens (AT.L)
Trading update confirms the thesis. 9x earnings for a 25% ROIC compounder with oil price optionality.
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Ashtead Technology released its full-year trading update this week.
The headline: margins came in ahead of expectations, the balance sheet continues to strengthen, and momentum is building heading into 2026.
For those unfamiliar, Ashtead is the dominant subsea equipment rental business serving offshore energy projects globally. Think picks-and-shovels for deepwater drilling and offshore wind installation. The company rents 30,000+ pieces of mission-critical equipment to the world’s largest offshore contractors.
The Numbers
Full-year revenue came in at approximately £203 million, up 21% year-on-year. Organic growth was 3%, with the balance from acquisitions completed in late 2024.
Adjusted EBITA margins came in “towards the top end of the Group’s medium-term target” - delivering profit slightly ahead of the £57.7m consensus expectation.
Revenue was marginally softer than the £205.8m consensus, but management’s disciplined approach to “quality of revenue” - trimming lower-margin activities from acquired businesses - drove profitability above expectations.
Leverage dropped to under 1.4x by year-end, down from higher levels post the Seatronics and J2 Subsea acquisitions. Management expects net debt below 1.0x by end of 2026.
Management also noted that “longer-term projects originally delayed through H1 2025” are now mobilising, creating “improving momentum” heading into 2026.
Why This Matters Now
The numbers are solid. But what makes this update particularly interesting is the backdrop against which it lands.
Oil prices currently sit near the low end of their historical range. Brent is hovering in the mid-$60s - well below the long-run average in real terms.
When oil prices stay low for extended periods, investment in new production declines. Rig counts fall. Supply eventually erodes. And that reduction in supply ultimately forces prices higher - sometimes much higher.
We’re seeing the early stages of this dynamic play out. U.S. rig counts have been falling steadily. Production growth is expected to peak and decline through 2026.
The market currently treats Ashtead as a levered oil play - when oil rises, the stock rises; when oil falls, the stock falls. That’s an oversimplification of a business where the majority of work is maintenance and decommissioning of existing infrastructure. But it’s how the stock trades.
So you have a business delivering strong margins and deleveraging rapidly, trading at 9x earnings, with a potential tailwind building in its primary end market that the market isn’t pricing in.
In the rest of this post, I discuss:
What this update tells us about execution and capital allocation
The asymmetry I see in the current setup
Why 9x earnings feels mispriced for this quality of business
My positioning and outlook from here