Aston Martin Lagonda Global Holdings PLC News | The Twelfth Magpie

I think the Aston Martin share price could have a lot further to go

Harvey Jones — Fri, 07 May 2021 09:49:18 +0000

A year ago, I wrote that the Aston Martin Lagonda Holdings (LSE: AML) share price was falling “faster than a Bond villain out of a helicopter”. The company’s £4.33bn market-cap at flotation had shrunk to £542m in just 18 months, a drop of almost 90%. My conclusion? “It would need a 007 scriptwriter to get the company out of today’s tight spot.”

How funny I thought I was then. But I’m not laughing now. The Aston Martin share price has since rebounded 95%. With one bound, the James Bond car maker was free! If anybody needs a better scriptwriter, it’s me.

In my defence, I was writing in the gloomy early months of the pandemic, long before November’s Covid vaccine breakthrough triggered a growth stock revival. Few saw that coming in May.

Bond’s car maker is back

The share price revival has also been driven by a management shake-up at Aston Martin, bringing in new CEO Tobias Moers and four independent non-executive directors. In October, German car brand Mercedes Benz said it would increase its stake in Aston Martin to 20% by 2023. The group also settled its short-term liquidity needs.

The Aston Martin share price has idled lately and this week ‘s first quarter results did little to change that. Yet they looked promising to me.

Q1 losses before tax narrowed from £110.1m to £42.2m, year-on-year, while revenues shot up 153% to £224.4m. This was “principally due to wholesale growth and stronger pricing dynamics,” as Aston Martin reduced its dealer GT/Sport stock as planned.

Wholesales jumped 134% to 1,353 units. The UK lockdown “significantly disrupted” dealer operations, but still delivered 19% year-on-year growth.

The FTSE 250 group’s new luxury SUV looks like a winner, generating 55% of those wholesale sales. The group is famed for its grand tourers and sports cars, but SUVs are much bigger sellers. This could help the Aston Martin share price fire on all cylinders. Sales in China were particularly strong.

Today’s Aston Martin share price tempts me

But the iconic brand still has to play catch-up in the electric vehicle market. It aims to sell its new plug-in hybrid DBX from 2023, and first battery vehicle “mid-decade”.

Naturally, the Aston Martin share price is now more expensive than when I gunned it down a year ago. The market-cap is now £2bn. The company remains risky, given stiff competition in the electric car market. Past volatility can’t just be forgotten. I expect plenty more of that.

The much-postponed Bond movie No Time To Die is scheduled for an October release, which should give the Aston Martin profile another boost and, with luck, its share price too. The stock remains risky, but I’d say it’s a tempting buy for the long term.

Given my previous forecast, some might see that as a trigger to sell, instead. Now let’s see what’s in this year’s script.

The post I think the Aston Martin share price could have a lot further to go appeared first on The Twelfth Magpie.

More reading

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Will the Aston Martin share price recover in 2021?

Zaven Boyrazian, CFA — Wed, 10 Mar 2021 10:05:06 +0000

The Aston Martin (LSE:AML) share price has been on a downward trajectory ever since its IPO in 2018. Even before the pandemic hit, the business was haemorrhaging cash and reporting increasing losses with each passing year.

But recently, its share price has begun recovering. Is Aston Martin finally on track to becoming a great business? And should I be adding it to my portfolio? Letâs take a look.

A new chapter for Aston Martin

In early 2020, the company received a Â£500m rescue package from Canadian billionaire Lawrence Stroll, who now sits as executive chairman. The company is undergoing substantial restructuring under his guidance. And so far, things appear to be going well given the Aston Martin share price is up almost 75% since September last year.

As part of this restructuring plan, Tobias Moers was appointed as the new CEO. He has over 25 years of experience within the automotive industry and had been chairman and CEO of Mercedes since 2013.

The company is switching its strategy. It’s bringing new vehicle development in-house while using Mercedes as a key producer and supplier of bespoke engine parts. I think itâs fair to say that Tobiasâs existing relationship with Mercedes certainly helped form this new partnership.

The company also launched a brand new model â the Aston Martin DBX â which has a lofty price tag of Â£158,000. Despite the premium cost, the car appears to be very popular, with more than 1,200 sold in the last quarter of 2020.

Why did the Aston Martin share price rise?

The business recently released its final results for last year, and at first glance, they were pretty dreadful. Net losses increased by nearly four times to Â£466m. The number of cars sold to dealerships and wholesalers dropped by 32% and 42%, respectively. And to top it all off, Â£98m of R&D technology was written off as part of its new strategy.

Needless to say, this does not exactly indicate a thriving business. So why did the share price go up?

While the overall results were poor, some promising trends emerged. Thanks to the new DBX model’s popularity, total revenue actually increased by 3%, even though the total number of cars sold dropped by around a third.

Subsequently, management has forecast that 6,000 cars will be sold in 2021. Half of which will be the new DBX model. This is actually 20% lower than the previous year. But the premium-price of the DBX means that if the company hits this target, it will become profitable again for the first time in five years.

The bottom line

The preliminary results of the new strategy indicate to me that Aston Martin is heading in the right direction. But there are still many challenges ahead. The most prominent of which is its level of debt. The firm has over Â£1.1bn of loans to repay. And so, even if the firm achieves profitability, it may take some time for the balance sheet to become healthy again.

That means it could take time for the share price to fully recover, even if it rises further this year.Â

Therefore, I wonât be adding Aston Martin to my portfolio today, but Iâll definitely be keeping an eye on how it performs over the next few quarters.

The post Will the Aston Martin share price recover in 2021? appeared first on The Twelfth Magpie.

More reading

Zaven Boyrazian does not own shares in any of the shares mentioned.Â The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The Aston Martin share price is dirt-cheap. I think you’d have to be tough as James Bond to buy it

Harvey Jones — Tue, 28 Jul 2020 08:28:55 +0000

There is nothing smooth and sleek about the Aston Martin Lagonda (LSE: AML) share price. While the James Bond carmaker creates luxury motors, its stock is now trading at a bargain bin price of just 48p a share.

On 6 December 2019, less than eight months ago, the Aston Martin share price was riding high at 630p. It has since lost around 92% of its value. Not since Goldfinger got sucked out of a jet aircraft has anything connected with the Bond franchise fallen so far and so fast.

Aston Martin is a top luxury brand, with a lousy financial history. The Warwickshire-headquartered company has gone bankrupt seven times in its 107 years. This is a super-high-risk buy.

New chief executive Tobias Moers takes the wheel from 1 August, having been recruited from Mercedes’ high-performance subsidiary AMG. News of his appointment sparked a recovery in the Aston Martin share price, now he has to deliver in challenging times.

Although the coronavirus crash cannot be blamed for the company’s problems, it hasn’t helped. Car sales almost halved in the first quarter, from 1,057 last year to 578. Losses before tax jumped almost seven-fold from £17.3m to £118.9m.

Aston Martin share price crunch

Moers’ predecessor Andy Palmer made some odd manoeuvres during his six years at the helm, shifting into SUVs, speedboats and Florida property, and running up massive debts along the way. By the end of his tenure, net debt topped £875m, against net cash of just £107m.

January’s emergency £500m cash raise helped ease the immediate threat. With sports car billionaire Lawrence Stroll heading the consortium, market sentiment picked up. Stroll is making sweeping changes, and is focusing “on cost and investment control consistent with restoring profitability”. So can the Aston Market share price get back in gear?

It will be a long haul, with setbacks along the way. Investors took a hit last month, when the group announced a £152m equity raise in late June, selling 304m shares at 50p each. Its Q2 trading statement published at the same time inevitably showed lower retail sales and wholesale, with dealer stock reduced by 617 units.

On a more positive note, at least more than 90% of its dealer network is now open. There are some “positive” signs coming out of China. Forward orders for its new DBX SUV appear strong.

A really high-risk buy

The new management team is going back to basics, focusing on high-performance cars and racing, rather than property offshoots and whatnot. It will have to drive a recovery in the teeth of a pandemic, which now seems to be threatening a second wave of economic misery.

The Aston Martin share price is ultra cheap for a reason. Despite attempts to boost financial stability, net debt still stood at £883m on 31 May, against cash of £244m. My big worry is that the iconic brand names sucks in dreamers, who will struggle to make success a reality. This is the ultimate boy’s toy.

If you want to inject some risk to your portfolio, Aston Martin could be the stock for you. But only invest money you can afford to lose!

The post The Aston Martin share price is dirt-cheap. I think you’d have to be tough as James Bond to buy it appeared first on The Twelfth Magpie.

More reading

Should you buy the dirt-cheap Aston Martin share price before markets recover?

Harvey Jones — Wed, 13 May 2020 12:34:07 +0000

How much worse can it get for the Aston Martin Lagonda (LSE: AML) share price? The James Bond car maker is down another 6% this morning, after its first-quarter results showed losses growing due to coronavirus. This follows a drop of 8% yesterday, following a downgrade by analyst Peel Hunt.

It would be fine if Covid-19 was mostly to blame for its woes, but it isn’t. The Aston Martin share price has fallen faster than a Bond villain out of a helicopter since floating 18 months ago. Its original £4.33bn market-cap has plunged £542m, a drop of almost 90%.

Investors who got behind the flotation have endured a hellish ride. We love a contrarian bargain on the Fool, but this is now a leap of faith.

This stock keeps falling

Covid-19 was the last thing the iconic luxury car brand needed. The Aston Martin share price traded at 160p as recently as January. Today, you can buy it for around 35p.

This morning, the group reported a first quarter pre-tax loss of £118.9m, almost seven times higher than last year’s £17.3m loss. Revenue fell 60% to £78.6m, amid falling dealer demand and lower average selling prices. Total wholesale volumes fell 45% to 578 units, with none at all in China in January and February.

Canadian Formula 1 billionaire Lawrence Stroll, now executive chairman, took a bullish approach to these miserable numbers. He hailed the reduction in dealer inventories, a successful £536m capital raise, and the launch of its delayed DBX sports utility model. DBX “remains on track for deliveries in the summer and has a strong order book behind it extending into 2021,” he said.

Aston Martin share price sinks

Aston Martin has a pre-eminent brand, and is now looking to develop its range of mid-engined cars, as well as refreshing its core sports car models. This may not be the end of the fundraising though, as it may have to research refinancing options to increase liquidity.

Naturally, investors should approach with caution, even given today’s low, low Aston Martin share price. Demand for luxury cars may enjoy a V-shaped recovery once the pandemic is over, as many wealthy buyers will emerge financially unscathed. If the latest James Bond film is released in the autumn, that could give it another boost.

It would be a brave person to recommend people buy into the stock today, and I’m no hero. The company was already in severe difficulties before the pandemic. Future funding could be harder to come by. Stronger companies could go to the wall in the months ahead. Sentiment will be in short supply. Remember, this is a company that’s gone bankrupt seven times in its history.

The automotive industry is facing radical transformation as climate fears grow. But Aston Martin won’t produce its first electric car until 2025. It would need a 007 scriptwriter to get the company out of today’s tight spot.

The post Should you buy the dirt-cheap Aston Martin share price before markets recover? appeared first on The Twelfth Magpie.

More reading

Full steam ahead for this new FTSE 250 growth stock? Here’s why I’m not tempted

Paul Summers — Tue, 05 Nov 2019 10:59:45 +0000

Newly-listed companies often attract great excitement from investors. Unfortunately, this enthusiasm is more often than not quickly replaced with disappointment when more details about the state of the business emerge. Luxury car maker Aston Martin is an example.

Since arriving on the market to a huge fanfare last year, the firm’s shares have performed appallingly, due to it selling not nearly enough of its much-lauded cars. The stock changes hands for just 426p a pop as I type — a little over 75% below the price fetched when first listed.

It’s for this reason, I’ve taken more of an interest in the half-year results of travel platform operator Trainline (LSE: TRN) this morning. The company only came to the market in late June and, aside from a trading update in September, this is the first chance investors have had to see how their new holding is faring.

Will it buck the IPO trend?

First impressions are good. Net ticket sales jumped 19% to £1.8bn in the six months to the end of August, partly attributed to the rise in the adoption of etickets in the UK (Trainline’s app saw year-on-year download growth of 59%). A rise in customers at its far-smaller international division was also credited.

The above, combined with additional streams such as advertising and insurance, saw revenue rise 29% to £129m. That said, Trainline still reported a post-tax loss of £89m for the period, largely due to one-off costs incurred from the listing.

Perhaps most importantly, the FTSE 250 member remains positive on its outlook, reiterating it expects net ticket sales percentage growth in the high-teens over the full year (ending 28 February) and group revenue in the low-to-mid-20% range.

Not bad. So, it’s a ‘buy’?

Well, no company is worth buying at any price and, despite today’s encouraging set of results, this is where the investment case for Trainline breaks down for me.

Before markets opened today, the stock was trading on almost 52 times earnings. That’s very high, even for a company that stands to benefit greatly from more people doing more things with their mobile phones. Indeed, the fact market participants have greeted today’s numbers with a collective shrug suggests a lot of optimism is already priced in. Only through demonstrating its ability to consistently hit/raise profit targets will more people be likely to buy in, I think.

This doesn’t necessarily mean Trainline’s share price is destined to repeat the path of Aston Martin’s. For one thing, the latter’s finances are in a far worse state, evidenced by the fact it’s now required to pay 12% interest on the £120m cash it borrowed a couple of months ago.

There’s also little doubt demand for Trainline’s services is likely to be more reliable given that rail travel is a necessity for many. By contrast, buying an Aston Martin is something most of us are unlikely to do. For this reason, the former presents as a better pick for defensively-minded investors in spite of the punchy valuation.

All that said, I’m exercising caution. Highly-rated growth stocks tend to be hit hardest when investors get nervous and, with our EU departure still up in the air and speculation of a looming recession, protecting what capital I have rather than chasing profits takes priority right now.

The post Full steam ahead for this new FTSE 250 growth stock? Here’s why I’m not tempted appeared first on The Twelfth Magpie.

More reading

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Forget the Aston Martin share price, I’d buy this FTSE 250 income champion instead

Rupert Hargreaves — Wed, 24 Jul 2019 09:48:53 +0000

Luxury car-maker Aston Martin (LSE: AML) came to the market with a great deal of fanfare at the end of 2018. However, since the company’s IPO, the shares have failed to live up to expectations.

Year-to-date, the stock has underperformed the FTSE 100 by around 30% and every £10,000 invested in the company at its IPO is worth just £7,000 today.

Terrible update

It doesn’t look as if this performance is going to improve any time soon. Earlier this year, management warned that the company is facing challenging market conditions, and this challenging environment has persisted.

As a result, the company now expects wholesale vehicle delivery volumes to sit between 6,300 to 6,500 in 2019, that’s down from guidance of around 7,100 to 7,300 in February, a reduction management has labelled “disappointing“.

The decline in wholesale volumes is also expected to weigh on profit margins. Management is now forecasting an adjusted earnings before interest, taxes, depreciation and amortisation margin of around 20% for 2019, down from 24% as reported in February. The one bright spot in the group’s business is retail sales, which expanded 26% in the first half of the year. But this hasn’t been enough to offset the decline in wholesale sales volumes.

Against this backdrop, management says it is “taking decisive action to manage inventory and the Aston Martin Lagonda brands for the long term,” which includes reducing capital spending and concentrating on the quality, not the number of vehicles produced. That’s all well and good, but falling sales volumes aren’t going to bolster investor confidence in the company, which is badly needed considering the stock’s performance since its IPO.

With this being the case, unless there is some good news from the company soon, I think shares in Aston Martin will only continue to decline as investors drift away from the floundering business.

A better buy

In my opinion, a better business to invest your hard-earned money in is Greene King (LSE: GNK).

Greene King and Aston Martin couldn’t be more different. One’s a UK-focused pub operator, and the other is a global luxury car brand. One conjures up images of lukewarm pub food and sticky tables, while the other produces cars driven by James Bond.

However, Greene King is profitable and has a history of returning cash to investors, while Aston Martin is losing money and has declared bankruptcy seven times.

As an investor, I know which company I would rather own. This year, City analysts believe Greene King will report a net profit of nearly £200m and earnings per share of 64p, which puts the stock on a forward P/E of just 10. On top of this, analysts have pencilled in a dividend per share of 33.3p, of giving a dividend yield of 5.1% at current levels. These metrics are desirable when compared to Aston Martin. With wholesale car deliveries falling, there’s a good chance the firm could report a loss for 2019, and there’s no chance of a dividend for at least several years.

That being said, Greene King is facing its own problems. Rising costs and cooling consumer spending are potential risks to growth, but the company has so far managed to deal with these problems effectively. Analysts are predicting an 18% increase in earnings per share this year. That’s why I’d rather invest my money in Greene King than struggling Aston Martin.

The post Forget the Aston Martin share price, I’d buy this FTSE 250 income champion instead appeared first on The Twelfth Magpie.

More reading

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.