Picture supply: Aston Martin
Aston Martin Lagonda (LSE:AML) shares have remained caught in reverse during the last yr. The FTSE 250 carmaker now offers at 70.2p per share, a whopping 59.5% decrease than it was 12 months in the past.
Somebody who purchased £10,000 value of shares would have seen the worth of their funding tumble to £4,046. They wouldn’t even have acquired any dividends to assist soften the blow, both.
Aston Martin’s share value sits considerably under the 661.9p it was at 5 years in the past. However previous efficiency isn’t at all times a dependable information to the long run, and investing within the luxurious carmaker in the present day may yield sterling returns if it recovers.
So ought to buyers take into account shopping for Aston Martin shares in the present day?
Robust occasions
It’s simple on one hand to see the corporate’s unbelievable enchantment. Its merchandise are the epitome of fashion, velocity. sophistication, and let’s face it, intercourse enchantment.
Aston Martin’s affiliation with James Bond because the mid-Sixties — and the model’s involvement within the dynamic world of Formulation One — haven’t completed it any hurt, both.
However whereas its label and merchandise are extremely fascinating, the identical actually can’t be mentioned for the corporate itself, a minimum of for my part. So what’s the issue?
The difficulty is that Aston Martin is combating fires on plenty of fronts. Final yr, pre-tax losses rose by 21% to £289.1m, partly because of a 9% drop in wholesale volumes. Gross sales declined on the again of provide chain disruptions and difficult circumstances in China, troubles that also persist.
In consequence, internet debt — which was already fairly regarding at 007’s favorite carmaker — shot up sharply. On the finish of 2024, Aston had internet debt of £1.2bn, up 43% yr on yr. The spectre of recent rights points and debt issuances nonetheless looms massive.
Tariff discuss
As if Aston Martin didn’t have sufficient issues, on Thursday (27 March), US President Trump drew international carmakers additional into his escalating commerce battle.
From 2 April, the US will slap a 25% tariff on all imported automobiles, placing a hefty premium on already-expensive marques like Aston.
On the plus facet, delays to beforehand introduced tariffs from the US could recommend this thumping import tax isn’t a completed deal. As well as, UK chancellor Rachel Reeves has mentioned the federal government is “in intense negotiations” with Washington to keep away from any automotive tariffs.
However simply the mere menace of commerce tariffs is sufficient to chill my bones. Final yr, gross sales to the Americas — dominated by demand from US prospects — accounted for 40% of group revenues, making it by far the corporate’s single largest market.
With all of its manufacturing situated within the UK, Aston Martin can be particularly weak to any ‘Trump Tariffs.’
What subsequent?
It’s hoped {that a} string of latest automotive launches (together with the not too long ago revamped Vanquish and the upcoming Valhalla) will revive the corporate’s fortunes. However the extremely aggressive nature of the automotive market means success is in no way assured.
And Aston Martin’s restoration is made much more tough given difficult financial circumstances in key markets. On stability, this can be a FTSE 250 share I believe buyers ought to take into account steering properly away from.
