Picture supply: Aston Martin
Aston Martin Lagonda (LSE:AML) shares have remained caught in reverse over the past 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 obtained 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 all the time a dependable information to the long run, and investing within the luxurious carmaker at present may yield sterling returns if it recovers.
So ought to traders think about shopping for Aston Martin shares at present?
Robust instances
It’s simple on one hand to see the corporate’s unbelievable enchantment. Its merchandise are the epitome of fashion, pace. sophistication, and let’s face it, intercourse enchantment.
Aston Martin’s affiliation with James Bond for the reason that mid-Sixties — and the model’s involvement within the dynamic world of Method One — haven’t finished 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 preventing 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 hard circumstances in China, troubles that also persist.
Because of this, 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 contemporary rights points and debt issuances nonetheless looms massive.
Tariff speak
As if Aston Martin didn’t have sufficient issues, on Thursday (27 March), US President Trump drew world 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 aspect, delays to beforehand introduced tariffs from the US could counsel this thumping import tax isn’t a finished 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 positioned within the UK, Aston Martin could be particularly weak to any ‘Trump Tariffs.’
What subsequent?
It’s hoped {that a} string of recent automotive launches (together with the lately 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 troublesome given difficult financial circumstances in key markets. On stability, this can be a FTSE 250 share I feel traders ought to think about steering nicely away from.
