A rare chance to get rich with Aston Martin shares?

Aston Martin (LSE:AML) shares are quite unique in the UK. That’s because there are no other British car manufacturers in it FTSE 350. It is a sad reflection on an industry that once employed hundreds of thousands of people in Britain.

Shares have hit the headlines recently after surprise results rose, and after investors saw value in Fernando Alonso’s F1 performance in Bahrain.

However, Aston Martin shares are still down 84% in the three years since launch – despite the rally.

So shares of Aston Martin can make me rich? Let’s have a look.

The turning point

In early March, Aston Martin impressed investors with better results. The company made a loss of £495 million before tax. However, the company registered a narrow operating profit of £6.6m in Q4.

Meanwhile, gross profit increased by 31% year-on-year to £451m and gross margin increased by 2% to 33%, reflecting better pricing and gross profit for core models.

The results show that the company’s fortunes are on the rise. Chief executive Lawrence Stroll has refocused the company on higher-margin vehicles, the ultra-luxury market, with the DBX at its core.

Hit the target

Stroll is targeting £2bn in revenue and £500m in adjusted EBITDA by 2024/2025. However, investors are not yet convinced.

But things are looking up and, personally, I believe that the company will reach its goals. In a comprehensive March report, chief financial officer Doug Lafferty said that “very confident“To achieve the 2025 goal.

The business expects to hit its 2024/2025 financial targets with sales of just 8,000 cars a year, down from Stroll’s target of 10,000. An estimated 6,412 vehicles will be sold in 2022.

A masterstroke

Inauguration of the former Ferrari boss Amedeo Felisa as CEO last year could be something of a masterstroke. The Italian luxury brand is known for its considerable profits – the company earned $106,078 per unit sold in 2021.

Higher margins are key to Aston’s turnaround success. There will be 80 Aston Martin Valkyrie deliveries during 2022, including 36 in Q4. The vehicle starts at $3m.

DBX is also at the center of this. The high-margin, high-volume SUV is also priced between the range-topping Range Rover and the Bentley Bentayga.

Can Aston make me rich?

In theory, if EBITDA of £500m is achieved in the next few years, I would expect the share price to rise. However, the problem is debt. Debt falls, but repayments will continue to drag on profits for some time.

The above forecast for the year 2023 shows the huge windfall provided by the debt, with interest costs expected to come in at £120m.

However, in the long term, if the guidance remains, I believe the debt will fall and the business will become truly and sustainably profitable.

Can Aston shares make me rich? Well, it is difficult to say at the moment where the stock price will be five years. But my money went up. That’s why I bought another one.

After all, Ferrari, which sells 11,000 vehicles a year, is worth €48bn, at the time of writing. That’s about 24 times bigger than an Aston Martin.