Image source: Aston Martin
Since July 2021, the Aston Martin Lagonda (LSE:AML) share price has been the third-worst performer on the FTSE 250. And it’s a similar story over the past year.
Only four other stocks have done worse. Today (14 July), the luxury car maker’s shares change hands for less than 40p.
But what’s a fair price? Let’s explore.
Why have the wheels come off?
It doesn’t take a genius to work out why the Aston Martin share price has performed so badly following the company’s 2018 IPO. It’s reported annual post-tax losses ever since.
Having said that, there are plenty of examples of loss-making companies valued more highly. However, these are usually able to demonstrate growth and, generally speaking, there’s a clear path to profitability. Unfortunately, this isn’t the case with this British icon.
What’s it worth?
But it’s difficult valuing loss-making businesses. Conventional measures based on earnings are useless. Revenue’s one option. Here, Aston Martin’s valued at 0.3 times sales. This doesn’t seem excessive compared to other European car makers. Most trade at 0.15-0.6 times revenue.
An alternative approach is to look at the group’s balance sheet. At 31 December 2025, its net assets were £329m. Based on its current market-cap, it has a price-to-book ratio of 1.15. This is comfortably below its five-year average.
What do analysts think? The consensus is a 12-month target that’s a third higher than the group’s current share price.
All these valuations suggest that the shares offer some value at the moment. But ultimately, a stock’s only worth what someone’s prepared to pay for it. Currently, that’s less than 40p.
What next?
In my opinion, we shouldn’t be surprised by Aston Martin’s disappointing financial performance. After all, it’s reportedly gone bust seven times since being founded in 1913. However, I think this is misleading as it often confuses a change of ownership with bankruptcy.
Nevertheless, I think it’s a sad reality that the British icon isn’t firing on all cylinders at the moment. And it’s going to need to sell lots more cars to break even, let alone return to black.
I suspect the next chapter in Aston Martin’s story will — most likely – result in another of change of ownership. Due to its rich heritage, valuable brand and beautiful cars, it’s the sort of business that will always attract the interest of wealthy petrol-cum-electro-heads. And with its recent dismal share price performance, now could be a good time for a potential buyer to strike.
Having said that, the group’s ownership structure makes this more complicated than might otherwise be the case. And it wouldn’t be sensible to buy a stock based on takeover speculation alone.
At the end of 2025, its major shareholders were:
- Yew Tree Consortium (32.99%) – controlled by the group’s boss, Lawrence Stroll.
- Geely (14.08%) – the Chinese car manufacturer.
- Saudi Arabia’s Public Investment Fund (13.88%).
- Mercedes-Benz (7.54%).
My view
Despite its troubles, I think there’s an investment case. If Aston Martin can show it’s moving in the right direction, its share price is likely to respond favourably. Even if the group doesn’t become profitable in the immediate future, an improving picture could lead to renewed investor optimism.
But an investment would be too risky for me. Personally, I believe there are other exciting opportunities to consider elsewhere.
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James Beard does not have positions in any of the companies mentioned.
This story originally appeared on Motley Fool
