Stock Analysis & Valuation Aggreko Plc (AGK.L)

• Previous Close: £869.50
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	0.91	-100
Graham Formula	2.87	-100

Strategic Investment Analysis

Company Overview

Aggreko Plc (LSE: AGK.L) is a global leader in providing modular, mobile power, heating, cooling, and related services. Headquartered in Glasgow, UK, the company operates through three key segments: Rental Solutions, Power Solutions Industrial, and Power Solutions Utility. Aggreko serves diverse industries, including oil & gas, mining, utilities, events, and telecommunications, offering diesel and gas generators, solar-diesel hybrid plants, cooling systems, and battery storage solutions. With 195 sales and service centers worldwide, Aggreko is a critical enabler for industries requiring temporary or off-grid power solutions. The company’s expertise in hybrid power and energy efficiency positions it well in the growing demand for sustainable and flexible energy solutions. Despite challenges in 2020, including a net loss, Aggreko remains a key player in the industrial rental sector, supporting infrastructure projects, disaster recovery, and large-scale events globally.

Investment Summary

Aggreko Plc presents a mixed investment case. The company’s global footprint and diversified service offerings provide resilience, but FY 2020 saw a net loss of £1.11 billion (GBp), driven by pandemic-related disruptions. However, strong operating cash flow (£422 million GBp) and a solid dividend payout (348.5 GBp per share) indicate underlying financial stability. The stock’s beta of 1.22 suggests moderate volatility relative to the market. Aggreko’s exposure to cyclical industries (oil & gas, mining) poses risks, but its pivot toward hybrid power and renewable energy solutions could drive long-term growth. Investors should weigh its sector-leading rental infrastructure against macroeconomic uncertainties.

Competitive Analysis

Aggreko’s competitive advantage lies in its global scale, diversified power solutions, and strong service network. Unlike pure-play equipment rental firms, Aggreko specializes in complex, high-margin power projects, including hybrid and off-grid systems. Its ability to deploy rapidly for emergencies (e.g., disaster relief) and large events (e.g., Olympics) differentiates it from smaller regional players. However, the company faces stiff competition from industrial rental giants and energy service providers. Aggreko’s 2020 losses highlight vulnerability to demand shocks, but its focus on utility-scale and renewable-adjacent projects could mitigate cyclical risks. The lack of vertical integration (compared to OEMs like Caterpillar) is a weakness, but Aggreko’s asset-light rental model allows flexibility in adapting to market shifts.

Major Competitors

• United Rentals (URI): United Rentals is the world’s largest equipment rental company, with a broader focus than Aggreko (construction, industrial tools). Its scale and North American dominance give it pricing power, but it lacks Aggreko’s specialized power solutions. URI’s stronger financials (profitable in 2020) make it a more stable play, though less exposed to energy transition trends.
• Caterpillar Inc. (CAT): Caterpillar manufactures and rents heavy equipment, including generators. Its integrated model (production + rental) and brand strength are advantages, but it is less agile in custom power projects compared to Aggreko. CAT’s reliance on equipment sales makes it more cyclical.
• HSS Hire Group (HSS.L): A UK-based rental firm focused on tools and small equipment. HSS is a local competitor with no overlap in large-scale power solutions, but it competes in Aggreko’s general rental segment. Its smaller scale limits international reach.
• APR Energy (APR.AS): APR Energy (now part of Atlas Corp) specializes in fast-deploy mobile power plants, directly competing with Aggreko in utility-scale projects. APR’s leaner operations and focus on emerging markets pose a threat, but Aggreko’s broader service portfolio and cooling solutions give it an edge.