Market Sentiment Around Loss-Making Aston Martin Lagonda Global Holdings plc (LON:AML)
With the business potentially at an important milestone, we thought we'd take a closer look at Aston Martin Lagonda Global Holdings plc's (LON:AML) future prospects. Aston Martin Lagonda Global Holdings plc designs, develops, manufactures, markets, and sells luxury sports cars worldwide. The UK£1.5b market-cap company announced a latest loss of UK£228m on 31 December 2023 for its most recent financial year result. As path to profitability is the topic on Aston Martin Lagonda Global Holdings' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Aston Martin Lagonda Global Holdings
According to the 9 industry analysts covering Aston Martin Lagonda Global Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of UK£78m in 2025. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 66% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Aston Martin Lagonda Global Holdings' growth isn’t the focus of this broad overview, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Aston Martin Lagonda Global Holdings currently has a debt-to-equity ratio of 116%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of Aston Martin Lagonda Global Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Aston Martin Lagonda Global Holdings' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:
Valuation: What is Aston Martin Lagonda Global Holdings worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Aston Martin Lagonda Global Holdings is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Aston Martin Lagonda Global Holdings’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
