We are only five weeks away from the deadline for those looking to fully exploit the £20,000 annual Stocks and Shares ISA allowance. Fortunately, I have a little bit of spare cash available that I want to put to good use.
As well as dividend stocks, I like to invest in well-known names that have fallen on hard times due to events — hopefully temporary in nature — which remain outside the control of the company.
One business that has had to deal with a multitude of challenges is Aston Martin Lagonda (LSE:AML). And this week (25 February), the luxury car maker published its 2025 results. Do they suggest that the fallen giant could be a great recovery play for 2026 and beyond? Let’s take a closer look.
What do the results show?
To be honest, the headline numbers don’t make for great reading. In 2025, the group sold 5,448 cars compared to 6,030 in 2024. The 10% reduction was attributed to “heightened challenges in the global macroeconomic environment, geopolitical uncertainties, the delivery of fewer Specials and a disciplined approach to balancing production and demand”.
| Year | Volumes | Revenue (£m) | Net profit/loss (£m) |
|---|---|---|---|
| 2017 | 5,098 | 876 | 77 |
| 2018 | 6,441 | 1,097 | (57) |
| 2019 | 5,862 | 981 | (118) |
| 2020 | 3,394 | 612 | (411) |
| 2021 | 6,178 | 1,095 | (189) |
| 2022 | 6,412 | 1,382 | (528) |
| 2023 | 6,620 | 1,683 | (227) |
| 2024 | 6,030 | 1,584 | (324) |
| 2025 | 5,448 | 1,258 | (149) |
And with President Trump threatening to revisit tariffs again, there could be worse ahead.
Other areas for concern include a 7.5 percentage point drop in the group’s gross profit margin. And its net debt increased by £217m over the course of the year. One positive is that it’s managed to raise its core average selling price by 5% to £185,000. This is impressive given such a tough retail environment.
To try and improve its financial performance, the group’s scaling back on its capital investment programme and is planning to reduce its workforce by 20%. It’s also hoping to generate £50m from the sale of its F1 naming rights.
A massive challenge
Valuing a company that’s persistently loss-making and showing no clear path to being in the black is difficult. It’s therefore hard to determine whether Aston Martin’s shares are now in bargain territory. Two broker downgrades sent them lower still on 26 February.
Looking at the 2025 numbers again, to break even at a pre-tax level, the group would have to sell another 6,691 cars, assuming everything else remained unchanged. This reflects the enormity of the challenge it faces. Of course, cutting overheads and improving its margin will help but, in the current environment, having to sell ‘only’ 1,000 more cars is going to be difficult. Indeed, the company’s expecting to deliver a “similar” number of units in 2026 to its 2025 output.
It’s a shame that an iconic brand producing beautiful vehicles finds itself in this difficult position. Its cars have been likened to works of art. Although the group meets one of my investment criteria of being beaten down, I’m unconvinced its stock has been over sold, despite its share price falling nearly 99% since the group’s IPO in October 2018.
With so much uncertainty, I’d rather use my spare ISA cash to invest in one of many other exciting opportunities currently available, although I genuinely hope Aston Martin will soon start to turn things round. Otherwise, it could be facing its eighth bankruptcy since being formed in 1913.
