As I write, the Aston Martin share price is down by 1.9% following the release of the FTSE 250 company’s full-year results on 28 February. I’m wondering if now could be a smart time to swoop in and snap up the growth stock.
Its shares were on the rise yesterday (27 February) as investors braced themselves for the release. It closed 3.9% up.
But this small climb doesn’t make a dent in the losses the stock has seen recently. This year, it is still down by 19.4%. In the last five years, it has lost a massive 93.2% of its value.
Despite a negative reaction, its latest release shows signs of potential. Could Aston Martin be about to turn a corner?
An overview
So, what did 2023 have in store for the British manufacturer?
Well, for the year revenue grew by 18%, fuelled by a rise in sales volume and selling prices reaching record levels. Sales for its new DB12 soared. Its Specials segment, home to models such as the Valkyrie, also saw solid growth. Across the year, Aston Martin sold 6,620 vehicles. That’s a 3% increase on the 6,412 it sold in 2022.
What’s more, losses more than halved, which is a major boost for the firm that has struggled in recent times. Pre-tax losses fell by 52% to £239.8m compared to £495m the year prior. The firm’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) also rose 61% to £305.9m.
Looking forward, CEO Lawrence Stroll said Aston Martin remains on track to achieve its “longstanding target of around 40% gross margin in 2024”. The firm maintained its near- and medium-term guidance.
Why the reaction?
That all seems positive. So why is its share price falling?
Well, despite sales volume rising, analysts were expecting sales to be closer to the 7,000-vehicle mark.
There was a small rise in net debt to £814m. That’s a 6% increase from 2022’s figure of £756.5m. However, the business plans to refinance all outstanding debt in the first half of the year.
F1 boost
But aside from its results, there’s another aspect of Aston Martin that interests me. That’s its F1 racing team, which is helping to make the brand more popular again.
Some 60% of customers are new to the brand, according to management. Alongside its venture into the ultra-luxury car market, I’d suspect the attention it’s receiving from the sport will also be driving this.
On top of that, in November of last year, its shares were also provided with a boost as Stroll sold a minority stake in the F1 team to private equity firm Arctos Partners. Going forward, I think this could be a beacon of hope for the company.
My take
But even so, I won’t be buying Aston Martin shares right now.
There’s too much uncertainty surrounding the business for me to feel confident in its long-term future. That’s even more so with it now looking like it’s seeking a new CEO. That’ll be its fourth chief executive in as many years.
There’s potential with the stock. And if it can build on this momentum, then maybe I’ll reconsider. However, I’ll be holding off from adding the British icon to my portfolio.
