I am an amateur investor. I don't claim to have any expertise on equipment hire companies but I thought I'd share my research on Lavendon Group which I decided to purchase earlier today. I really welcome the thoughts of others.

Summary of my view:

I like this share.

This power access equipment rental company is traded more cheaply than peers (on P/E and significantly more so on book value) with brokers putting this on a P/E of 8.3 for 2015. However, its recent RNS made no reference to market expectations (currently EPS of 16.9p) and if H1 growth is repeated for H2 this forecast P/E might be a bit wrong. H1 profits were up 17% and if the same happens for the full year then EPS would be 14.6p meaning the share is trading at a P/E of about 10. I think this is probably the more realistic 2015 target, not the broker target of 16.9p a share, given slight nervousness about the immediate outlook. Further, the immediate UK construction output does not look too rosy given the 4.2% nationwide fall in August although this may be a short blip - statisticians said it may be due to the summer being rainier than usual (though I don’t remember it being unusually rainy!).  

However, I like this share because the UK economy (where it gets 50% of its revenues) is doing OK, it’s rated cheaper than peers, has a good dividend, and the share price has fallen a bit so I think this might be a buying opportunity. The Middle East (which represents 25% of turnover) and French divisions are also doing well which may compensate for a UK shortfall, and the UK profit margin has increased. I wouldn’t want to pay much more than 150-160p at the moment though (although if UK construction stats improved I might revise that up) and my target price is probably in the region of 190-200p in the short-term.

I should qualify these remarks by saying that I know very little about the construction or equipment rental industry so I would appreciate others’ views!

About the company

Lavendon is an equipment rental company. The Company is engaged in the rental of powered access equipment. According to their website this equipment is also known as…

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