Aston Martin Share Price Forecast November 2021 – Time to Buy AML?

Shares of British independent car manufacturer Aston Martin (LSE: AML)  are in the red today, currently trading at 1586p at the time of writing. AML shares have only gained 4% in the last year and continue to lag far below the price at which they floated a little over three years ago. However, investors are concerned regarding a couple of recent bits of news.

Aston Martin – Technical Analysis

According to the financial statement released by Aston Martin, its market cap is at £187.272 billion with total assets worth £281.71 billion. Revenue for 2020 was at £61.18 billion with a profit margin of -68.54% compared to £98.05 billion in 2019.

Moving averages such as Exponential Moving Average (10)(1633.8),  Simple Moving Average (10)(1633.9), Exponential Moving Average (20)(1669.9), Simple Moving Average (20)(1678.6) and Exponential Moving Average (30)(1698.8) are indicating a sell action. Oscillators such as Relative Strength Index (14)(34.3),  Stochastic %K (14, 3, 3)(8.2),  Commodity Channel Index (20)(−181.5), Average Directional Index (14)(13.3) and Awesome Oscillator(−86.3) are neutral.

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Recent Developments

Aston Martin was struggling as it was on the verge of bankruptcy in 2020. Following the release of its DBX model with a hefty price tag, the automaker started to bounce back reviving the company’s revenue stream in a rather explosive way. The DBX model accounted for 2186 of the 4250 shipped over the last 9 months.  Revenue over the last month jumped from £270 million last year to £736.4 million.  This has resulted in pre-tax losses falling by almost 40% since the start of 2021 while cutting net debt by £60 million.

This has been welcome news for Aston Martin shares. Management has future plans to ship 6000 vehicles by the end of 2021 with plans of launching an updated DBX model by mid- 2022. However, there are some small concerns. While its income statement is in good shape, Aston martin’s balance sheet still needs a lot of work. Investors are becoming uncertain due to the level of debt, especially since the net adjusted financing costs came in £54 million higher than a year ago. As a result, losses rose from £80.5m in 2020 to £97.9 million this year.

Overall, the latest earnings report indicates that the worst is over for Aston Martin. It is still being able to get its cars out of the factories and onto customers’ driveways, despite supply chain disruptions. The company can return to profitability before the end of 2021, depending on whether the long-anticipated £2.5 million Valkyrie hypercar makes its planned debut next quarter. The interim results released this month indicated that both wholesale sales volumes and revenue increased by 173% compared to the same period a year ago.

Should You Buy AML Shares?

The interim results showed that directors have been building the Aston Martin investment case around plans to scale up production and can manage costs carefully. The strategy is starting to bear fruit as increased revenue suggests. However, one risk with the company is its indebtedness. This is a decrease from the prior year but still recorded £809 million.

Another piece of news that should catch investors’ eyes is the share purchases made by the directors, which included with one of them acquiring £1.7 million. These types of purchases by directors are seen as a vote of confidence in the company’s prospects. The launch of its first sports utility vehicle, the DBX, is a major share price driver. But its debt load remains high. Thus it would be better for investors to watch the share price from a distance and not invest right now.

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