You don’t have to own an Aston Martin to realise its total style and performance ability.
The last three to four years have been somewhat bumpy for the company, but I do believe that with its super-wealthy clique of investors clearly backing the group in its strategy, it has the potential to perform very well over the next two to three years.
With the car maker’s shares bumping along the lower price range currently, I would suggest that risk-tolerant investors should be picking up a few along the way.
The Business
Founded in 1913 by Lionel Martin and Robert Bamford, Aston Martin Lagonda Global Holdings (LON:AML) is today acknowledged as an iconic global brand synonymous with style, luxury, performance, and exclusivity.
Lagonda, which was founded in 1899, came together with Aston Martin in 1947 when both brands were acquired by the late Sir David Brown.
Based in Gaydon, Warwickshire, Aston Martin Lagonda designs, creates, and exports cars selling to more than 50 countries around the world.
Its sports cars are manufactured in Gaydon with its luxury DBX SUV range proudly manufactured in St Athan, Wales.
Aston Martin's vision is to be the world's most desirable, ultra-luxury British brand, creating the most exquisitely addictive performance cars.
The company declares that Aston Martin fuses the latest technology, time-honoured craftsmanship, and beautiful styling to produce a range of critically acclaimed luxury models, including the Vantage, DB12, DBS, DBX, and its first hypercar, the Aston Martin Valkyrie.
Aligned with its Racing Green sustainability strategy, Aston Martin is developing alternatives to the Internal Combustion Engine with a blended drivetrain approach between 2025 and 2030, including PHEV and BEV, with a clear plan to have a line-up of electric sports cars and SUVs.
The company is on track to deliver net-zero manufacturing facilities by 2030.
Q3 Trading
Last Wednesday the group published its results for the nine months to end-September.
On the face of it, the set of figures look awful, however, they actually came through better than market expectations.
Revenues were down 4% at £994.6m (£1.04bn), while adjusted EBITDA was 14% lower at £112.9m (£131.1m), leaving the group’s pre-tax loss at £228.9m (£259.8m).
On 30th September the company announced an update to its 2024 wholesale volumes, making a circa 1,000-unit reduction to address disruption in its supply chain and continued macroeconomic weakness in China.
The group still has a massive debt, but it is felt that can be repackaged again in due course.
The company is on track to deliver its recently revised FY 2024 guidance, which reflects an adjustment to volumes as the company continues with the H2 2024 production ramp-up following its new model launches.
Management considers that the group is well-positioned for sustainable growth as it moves ahead with a completely reinvigorated range of new models.
Management Comment
Recently appointed CO Adrian Hallmark stated that:
"Having only joined Aston Martin in September, I can already clearly see growth opportunities for the Company as we bring incredible products to market and deliver on our vision to be the world's most desirable, ultra-luxury British performance brand.
We recently launched Vanquish, successfully completing the most diverse, dynamic and desirable portfolio in the luxury segment.
Recent media reviews of our V12 flagship highlights the strength of Aston Martin's products, which now truly align with our ultra-luxury high performance strategy.
Long-term value creation and sustainable growth are key priorities as we look forward to Q4 2024 and beyond.
We will deliver our fully reinvigorated portfolio to market efficiently and maximise the considerable commercial potential, including greater personalisation opportunities, to further strengthen the order book.
In addition, we will drive profitability through a forensic approach to cost management and unrelenting focus on quality with a more balanced delivery profile in the future for our full range of new core models.
Improved financial and operational performance in Q3 2024, demonstrates our strategy's effectiveness.
We are on track to meet our revised Full Year 2024 guidance, which reflects the necessary action taken in September to adjust our production volumes given supplier disruption, which we are proactively managing, and the weak macroeconomic environment in China."
Analyst Views
After the recent Q3 results statement a number of analysts reduced their Price Objectives for the group’s shares.
Some ten analysts follow the company, this is the breakdown of their views – One is a Sell, six are for Hold, two look for Outperformance and one goes for a Buy rating.
The ratings put out a consensus average of 170p per share, with one analyst going for 100p and one for 363p.
In My View
It may sound very glib, but I have absolutely no problems with still fancying this group’s shares as a potential winner, despite all of its hassles.
I feel that its shares at the current 118p are a cracking ‘recovery gamble’ with at least 150p, possibly 200p in sight within the next year.
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