Acrow Ltd (ASX: ACF) this week reaffirmed its guidance for this year and, for the first time, provided guidance for the following year.
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Shares looking cheap
The analyst teams at both Shaw and Partners and Morgans have run the ruler over the trading update and both believe Acrow shares are undervalued at the moment.
We'll get to their specific share price targets shortly.
Firstly, let's have a look at what Acrow told the market this week.
The company, which specialises in hiring out construction-related assets such as scaffolding, said it was "experiencing improving activity levels across Australia, as anticipated''.
The company added:
During March, Acrow secured new hire contracts totalling $14.3 million, representing the highest monthly value of contract wins in the Company history, exceeding the previous record by over $2.5 million. Improving activity levels have also driven a materially stronger sales pipeline, which stood at $256.0 million as at the end of March, representing an increase of 34% on pcp and another record level.
Acrow said it had a strong trajectory heading into the fourth quarter of the financial year, which it expected to be its strongest for the year.
It added:
As a result of these outcomes, together with a general improvement in trading conditions, especially within the Queensland formwork business, where hire revenue in March reached its highest level in over 12 months, the Company is confirming FY26 revenue and EBITDA guidance.
The company's guidance was for sales of $315 to $325 million and EBITDA of $80 to $84 million.
Acrow also said the strong trading performance should generate "significant momentum'' heading into FY27.
It added:
This is supported by a confirmed forward order book in the Industrial Access division and the significant uplift now evident within the formwork markets, particularly in Queensland. Collectively, these factors provide the Board with the confidence to issue early FY27 revenue and EBITDA guidance, with revenue expected to be in the range of $335 million to $350 million and EBITDA in the range of $88 million to $98 million.
Analysts like what they see
The team at Morgans analysed the expected trading for Acrow and came up with a 12-month price target of $1.28 for Acrow shares, compared with 88.7 cents currently.
Morgans said the trading update was "encouraging'' and added:
Initial FY27 guidance was a positive surprise. While broadly in line with consensus, we view the early guidance as conservative and achievable, reflecting management's confidence in the outlook. Importantly, FY27 guidance also implies an improvement in EBITDA margins, suggesting a favourable shift in sales mix toward the higher margin Formwork segment.
The team at Shaw and Partners came up with a price target of $1.25 for Acrow shares, with a buy rating on the stock.
