Aston Martin Lagonda needs help to get out of trouble

James Bond usually defeats his enemies single-handed, thanks to the unfailing inaccuracy of their firearms. Aston Martin Lagonda, the UK luxury car brand endorsed by the fictional spy, needs help to get out of trouble. This has come from Investindustrial, a private equity group offering to buy 3 per of the battered stock. The price is a realistic one for this high-risk business, whose fortunes pivot on the launch of a sleek SUV this year. Companies with lower borrowings sometimes try to create floor prices for their stock via buybacks. But Aston Martin’s net debts are three times forecast 2019 ebitda of £293 million… The shares have fallen from £19 to around £10, the price at which the Italian buyout group has intervened… Shifting tastes, trade wars and Chinese domestic politics could prove Investindustrial wrong. But £10 per share looks fair, given what we currently know about this volatile equity. On analysts’ characteristically bullish 2022 earnings estimates, the price ratio against these would be just eight times, compared with 26 times for Ferrari. That new ratio is a clearer-sighted assessment of what Aston Martin is worth than the multiple a bevy of investment banks endorsed at the initial public offering. In real life, Bond too would catch himself praying that M would send back-up.
 
Lex.

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