Could this growth stock be a buy after more than halving it losses?

The Aston Martin share price is falling after the growth stock released its 2023 results. This Fool breaks down its performance.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Aston Martin

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Keough 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.

More on Investing Articles

Investing Articles

Up 10% today, I think this FTSE 250 growth share could continue to surge!

Babcock International's flying after upgrading its full-year forecasts. I think the FTSE 250 defence share might just be getting started.

Read more »

Investing Articles

The AstraZeneca share price jumps 5% on today’s strong results – but is it too expensive?

Harvey Jones hails the brilliant long-term performance of the AstraZeneca share price, but wonders whether the FTSE 100's biggest company…

Read more »

Investing Articles

Is this my chance to buy Alphabet shares?

A big step up in AI spending at Google has investors nervous, but has it created an opportunity to buy…

Read more »

Senior woman potting plant in garden at home
Investing Articles

£10k in savings? Here’s how an investor could aim for a monthly second income of £1,200

Mark David Hartley considers how investors could build towards an early retirement plan with a second income from a portfolio…

Read more »

Investing Articles

2 cheap shares to consider buying in a £20k ISA for income of £1,000 a year

Harvey Jones loves buying cheap shares and says these two FTSE 100 stocks look tempting today, especially as they offer…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Is it worth me buying Lloyds shares for 61p after a 49% rise?

Lloyds shares have risen significantly from their one-year traded low seen last February, which could mean no value is left…

Read more »

Investing Articles

I think this FTSE 100 fashion stock could skyrocket in 2025

JD Sports has had a disastrous few months of losses but 2025 looks primed to be the year for this…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Down 13%, this FTSE gem delivers a 9.4% yield and looks 57% undervalued to me!

This is one of very few FTSE 100 stocks with a combination of a 9%+ yield, forecast earnings growth of…

Read more »