Equities Update: Nvidia, Rolls-Royce, Aston Martin, Ocado, Aviva…

Aston Martin losses widen as new CEO drives head-on at addressing inefficiencies

Mark Crouch, market analyst at eToro, says: “There’s really not much to be excited about for Aston Martin investors. The luxury carmaker, who are going through CEOs faster than their cars go through tyres, has posted further losses for the year as the company’s debt pile jumped by another 40%. Ex-Bentley Motors CEO, Adrian Hallmark, is the latest candidate brave enough to get behind the wheel at Aston, and he will need to draw on all his experience to steer the company back into the black.

“The new CEO is wasting no time in addressing Aston’s inefficiencies, cutting 5% of its global workforce, while the decision to slam the brakes on the development of an all-electric range seems prudent as the company focuses on stabilising its financial position. There’s now a concentrated effort to consolidate and focus on key models like the upcoming Valhalla, the company’s first mid-engine hybrid supercar, as Aston Martin scrambles to gain some traction.

“Rights issues, share placements, and debt issuances have so far prevented bankruptcy, but make no mistake, Aston Martin is at a critical juncture, and the clock is ticking. The brand may be a regular feature in James Bond movies, but they’ll certainly need some of 007’s cunning and customary good luck to get out of this in one piece.”

Aviva expands profit, on track to acquire Direct Line

Adam Vettese, market analyst at eToro, says: “Aviva’s latest results have beaten analyst expectations and has seen their growth momentum continue. Insurance premiums have been on the rise which many UK consumers can attest to from recent experience and this has ultimately helped Aviva’s bottom line. The rising cost of claims due to inflation hiking materials and labour costs, as well as severe weather events increasing the frequency and severity of claims, have given insurers the green light to raise their premium prices significantly.

“The acquisition of Direct Line will bring cost synergies into play whilst meaningfully growing their book of business and Aviva looks to continue this strategy of acquisitions which will allow the firm to scale up further.

“Shares have been on a solid trajectory for the last 4 years and the dividend has once again grown year on year. Investors looking for a stable play with a decent income could do a lot worse than Aviva.”

Rolls Royce results: “Donald Trump loves a winner – and the defence industry is one of the biggest winners of them all

Garry White, Chief Investment Commentator at Charles Stanley, comments: “Tufan Erginbilgic, the chief executive installed to turnaround the fortunes of Rolls Royce after the pandemic brought the travel industry to its knees, is demonstrably having significant success.

“Cash management has improved, waste is being eliminated – and its share price now sits close to an all-time high. The blue-chip company has also returned to the dividend list after a five-year post-Covid hiatus with a higher-than-expected payout. A £1bn share buyback has been ushered into the market and management have been able to upgrade its mid-term targets as its order book swelled. The senior team at Rolls should be rightly proud of what they have achieved,

“But, to make it happen, Mr Erginbilgic also had a substantial amount of “luck” – which came in the strange form of Vladimir Putin and Donald Trump. The Russian leader’s invasion of Ukraine brought disturbing memories of war back to Europe and prompted the continent’s long march to rearmament. The US president doesn’t want Washington to pay for Europe’s defence and is forcing nations in the old continent to step up to the defence budget plate.

“This has created a perfect storm for sales teams in the defence industry. The tailwinds of a new geopolitics based on populism will have some winners and losers. We all know that Donald Trump loves a winner – and the defence industry is one of the biggest winners of them all.”

Rolls-Royce to buy back £1bn of stock as epic runs shows no sign of slowing down

Mark Crouch, market analyst at eToro, says: “Yhprum’s Law states that anything that can go right, will go right. And that’s exactly what’s happened at Rolls-Royce, who in a little of two years have seen their share price rocket by almost tenfold. Investors were eagerly awaiting this morning’s update keen to know how the company plans on engineering yet more growth after such an epic run.

“The aerospace and defense giant did not disappoint, announcing a 57% jump in profits. Free cash flow was up by £1.9bn, and the company’s operating margin increased to 13.8%. Rolls-Royce’s civil aerospace division, which accounts for over 50% of its business, has soared, as demand for engines has taken off, with airline passenger numbers continuing to grow, leaving the nightmare that was the pandemic in its wake.

“Defense has also proven strong as Rolls-Royce announces they are expanding their submarine facilities in Derby, further boosted by the UK government’s newfound commitment to increasing defense spending. Meanwhile, in the energy market, Rolls-Royce’s, and their small nuclear reactors, was named the preferred supplier by the Government of the Czech Republic and the Czech State utility.

“Currently sitting on a healthy net cash position Rolls announced a £1bn share buyback program for 2025. And following the reintroduction of their dividend, this caps off a great year for investors.”

Ocado narrows loss but tech-rollout lags

Adam Vettese, market analyst at eToro, says: “A familiar story from Ocado’s results: on the surface there is plenty to be optimistic about – the loss has narrowed, on track to be cash-flow-positive, fastest growing UK grocer. Unfortunately, optimism isn’t going to pay the bills.

“The trouble is that while all of these things are great, the sticking point is that operationally there are still some issues. The rollout of robotic grocery warehouses to partners isn’t where the firm would want it to be, and of those confirmed in the pipeline, we are seeing them kicked back towards 2026.

“The firm insists more warehouse deals are coming. But just how much longer will they have to burn cash for is the question investors eagerly await to be answered. Shares are trading at less than half of what they were at the beginning of last year, some investors might be looking at this as a cheap play with things seemingly only able to improve. If the orders don’t come and there are more delays on what Ocado does have then this may not be the case.”