Speedy Hire plc
Working smarter, aiming higher
During a period of less favourable market conditions, Speedy Hire has taken a progressive approach to strategic business improvement and this programme is gathering momentum. As a result, we consider it to be much more than a cyclical recovery story. The company’s share price has recently rebounded well from lows earlier in the year, but our 51.1p fair value per share is still c.34% above current levels.
Speedy’s Velocity strategy is a clear, well-founded holistic organisation transformation programme now entering its second implementation year (of five). Management has ambitious revenue growth and EBITDA margin expansion targets which offer the prospect of profit and earnings growth above wider market levels. Progress on headline metrics will be closely watched by investors but there is plenty of evidence of building blocks for enhanced growth being put in place already in our view.
Improving outlook: FY24 results (on 19 June) were lower year-on-year but we saw a robust underlying performance from core hire and services as well as free cash generation. With progress anticipated in FY25 - effectively confirming FY24 as the earnings trough - improving economic sentiment and increasing traction from Velocity actions taken, Speedy’s prospective growth profile is under consideration. In the near term, management has flagged a second half weighting in FY25 driven by the phasing of new business wins coming onstream. Over our three-year estimate horizon, we expect EBITDA and EPS CAGRs of c.25% and c.40% respectively as Speedy regains FY19 earnings levels in FY26 before a more marked step up in FY27.