The Motley Fool

Is the Aston Martin share price a bargain after the stock market crash?

Image source: Aston Martin

After the stock market crash of March, enough time has passed for the dust to settle. This enables us to look at a company and decide whether the crash (caused by the pandemic) has hurt a business for the long term, or is something it has rebounded from. For Aston Martin Lagonda Global Holdings (LSE: AML), the share price slump from March has added to its woes. 

After starting the year around 150p, the Aston Martin share price fell down to 46p by the middle of March. In the short term, the stock did trade back above 100p, but unfortunately it’s back at the time of writing to 50p. This represents a fall of 66% from the start of the year.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

A tough year

For Aston Martin, it hasn’t just been the pandemic that has hurt the share price. The business was struggling coming into the year, having posted a loss of £38.9m last year. It had already seen falling demand from consumers, and was struggling to control rising debt levels. Without strong profits, its high costs to develop new models needed to be funded via debt.

The pandemic really added to these problems for several reasons. Firstly, with the Aston Martin share price falling, the board decided to raise £152m from new shares. This is harder to achieve as you need a large take-up with a lower share price. Secondly, the factory had to shut, meaning that production ground to a halt. Thirdly, low consumer demand dropped even more for luxury items. This is logical, as rising unemployment and economic uncertainty seldom go hand in hand with a spike in £100,000+ sports car sales.

Is the Aston Martin share price now a bargain?

All of the above meant that half-year results came in well below par. But is too much bad news now priced in to the share price? The current share price reflects a market capitalisation of just over £900m. This has obviously fallen significantly over the past year. But take a look at the enterprise value, which stands at £1.66bn.

The enterprise value is the calculation on how much it would actually take you to buy the company. This includes debt levels and also factors in assets such as inventory and cash. Some view it as a more accurate depiction of the true value of the company. From this angle, the Aston Martin share price is undervalued, given the large difference to the enterprise value. 

Aside from number crunching, I can make a case for a share price rally from the new SUV, the DBX. Car enthusiasts are singing the praises of the new car, the first SUV Aston has ever produced. In terms of success, one can mirror it to the launch of the Cayenne SUV from Porsche in 2004. The move boosted profits enormously for the German car manufacturer. So for Aston, appealing to a different (and large) subset of the car market could be the catalyst needed to spark growth.

Ultimately, the Aston Martin share price does look like a bargain at the moment. I would average-in, buying some stock now but leaving some powder dry for a future second investment.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

jonathansmith1 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.