Equity Valuation : Aston Martin Lagonda Global Holdings PLC

• Autor(a) principal: Faustino, Pedro Jorge Ruivo
• Data de Publicação: 2023
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/41425
• topic: Domínio/Área Científica::Ciências Sociais::Economia e Gestão

The purpose of this dissertation is to determine a target price for the shares of Aston Martin, a UK luxury auto manufacturer, and provide an investment recommendation. The stock is down 96% since its IPO, therefore, it is of interest to understand if the stock is now trading at a fair price. Three valuation methods are presented, the discounted cash-flow method, comparable company analysis, and precedent transaction analysis. Within the DCF, three different scenarios were developed, an optimistic one that follows AM’s disclosed targets for the coming years, a pessimistic one that subjects the company to impacts felt by its peers during the 2008 financial crisis, and a base case where Aston Martin is expected to follow the same growth as the estimates for the SUV, Luxury, and Sports cars sales through 2027. For each of the scenarios, the analyst has made assumptions that best fit the current economic and geopolitical landscape, considering, for example, increases in raw material prices, and worsening of payment periods. The discount rate used was the weighted average cost of capital using the 5FF method to forecast the cost of equity, however, for comparison purposes, the Capital Asset Pricing Model and the 3FF were also considered. Within the comparable company analysis, multiples utilized were computed on a forward-looking and backward-looking basis. The research results in a Strong Sell investment recommendation, with a target price set of £0.73, representing a 126% overvaluation relative to the price the stock was trading at on August 31st, 2022 (£1.65).