Aggreko plc Begins Year From A Sprint Start

Shares in Aggreko (LSE: AGK) added 39p, or 2.6%, to 1,550p during early trade this morning, after the temporary power supplier reported revenue growth of 5% in the three months to 31 March.

AggrekoThe firm, whose power generators are used in major events, including the 2012 Olympics, saw particularly strong performance from its business in the Americas (revenue up 11%) and Europe (up 15%), while difficult trading conditions in Asia (down 21%) pegged back progress.

Agrekko added that net debt decreased by £43m to £320m, compared to debt of £587m at the same point last year. The easing of debt was attributed to a “disciplined” approach to capital expenditure.

Aggreko noted the encouraging start to the year, commenting:

“Order intake year to date in Power Projects has been strong, but a significant proportion of this is for relatively short-term work, so we continue to be cautious.”

“We expect fleet capital expenditure in 2014 to be at similar levels to last year, with around £130 million in the first half and around £215 million for the year as a whole; as always, we will adjust our rate of investment depending on market conditions.”

Based on this morning’s share price movement shares in Aggreko may trade on a P/E of 19, while analysts project a 2014 full-year dividend of 28p, covered three times by earnings.

As announced in the firm’s full-year results, £200m will be returned to shareholders, approval pending, to be paid in June 2014. Owing to its impressive cash generation, Aggreko is an income stock that, while not yielding the highest around (1.9%), is predicted to grow impressively in the coming years.

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Mark does not own shares in Aggreko. The Motley Fool has recommended shares in Aggreko.