The Aston Martin Lagonda (LSE:AML) share price was doing what it does finest in the present day (27 February) — falling. The FTSE 250 inventory is now down 42% in six months, 51% in a single yr, and 93% for the reason that begin of 2020. It’s an ongoing nightmare for shareholders within the luxurious carmaker.

But the Aston model stays iconic and the automobiles nonetheless possess the power to lure eyes from smartphones on the street. We’ve seen how UK model shares can bounce again strongly as soon as they hit all-time low. Shares of Burberry, for instance, are up 93% in lower than six months.

Does this inventory have the potential to supply the mom of all turnarounds? Let’s discover.

The British Ferrari?

The one different listed supercar maker akin to Aston Martin is Ferrari. Actually, Aston Martin in contrast itself to the high-end Italian model when it went public in 2018, saying it wished to construct a ‘British Ferrari’. It even employed the Prancing Horse’s former CEO, Amedeo Felisa, as its boss in 2022 (he has since left).

Ferrari’s present market cap is $90bn (roughly £71bn), whereas Aston Martin’s is simply £803m. Meaning an £11,500 funding made in the present day would turn out to be £1m if Aston Martin inventory went up 8,740% to succeed in Ferrari’s £71bn market worth.

What are the probabilities of that taking place although? Slim to none, I’d say, trying on the newest annual report for 2024. The variety of automobiles bought decreased 9% yr on yr to six,030, resulting in a 3% drop in income (£1.58bn). That was far under the ten,000 automobiles it had initially deliberate for the yr.

The pre-tax loss elevated 21% to £289m, whereas gross margin fell from 39.1% to 36.9%. In the meantime, internet debt widened to £1.16bn from £814m, with internet financing bills 47% larger at £190m. The steadiness sheet stays my greatest fear right here.

The EV is on ice

One optimistic was that it managed to lift the typical automobile promoting price to £245,000. Additionally, its first plug-in hybrid electrical automobile, Valhalla, is ready to launch this yr. The product isn’t the issue — it’s making them to promote at a revenue that’s proving so elusive.

Administration is guiding for mid-single-digit proportion wholesale quantity development in 2025. In the meantime, profitability ought to enhance, partly on account of a 5% discount it its workforce. And it expects decrease internet curiosity funds of about £145m this yr.

Nonetheless, there’s not an excessive amount of for shareholders to get enthusiastic about. Aston has even delayed plans for its first electrical automotive (EV) until “the latter a part of this decade“. That stated, this seems wise to me, because the agency simply doesn’t have the monetary firepower to fabricate and transition to EVs.

My transfer

At first look, the market cap of £803m appears too low for an organization like Aston Martin. And a price-to-sales ratio of 0.5 seems low cost.

Nonetheless, as a lot as I’d like to see the corporate succeed, I simply can’t deliver myself to take a position. The steadiness sheet worries me, as does the revolving door within the C-suite (5 CEOs in 5 years!).

Wanting forward, I don’t see the corporate remaining public for a lot of extra years. I feel it is going to be acquired or taken non-public. Both method, I’m not occupied with shopping for shares.