United States Lime & Minerals (USLM): Evaluating Valuation After Recent Share Price Pullback

United States Lime & Minerals (USLM) shares have edged lower over the past week, dipping 14%. Despite the recent slide, the company’s three-year return remains strong, climbing over three times from where it traded previously.

See our latest analysis for United States Lime & Minerals.

Despite the recent pullback, United States Lime & Minerals continues to show long-term strength, with a 1-year total shareholder return of 2.4% and an impressive 337% gain over three years. Momentum has cooled lately. Its track record suggests investors may be reassessing growth expectations or risk appetite after such a strong run.

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With the stock now trading at a notable discount to analyst targets, is United States Lime & Minerals undervalued at current levels, or are investors wise to tread carefully as future growth may already be reflected in the price?

Price-to-Earnings of 24.7x: Is it justified?

United States Lime & Minerals is currently trading at a price-to-earnings (P/E) ratio of 24.7, higher than both its peer average of 22.8 and the global basic materials industry average of 15.1. At the last close of $112.97, the valuation appears stretched relative to the sector.

The P/E ratio measures how much investors are willing to pay for each dollar of earnings. For companies in the materials sector, it reflects both the stability of profits and the market’s expectations for future growth. A higher multiple often signals optimism about growth potential or quality, but it can also indicate over-exuberance.

For United States Lime & Minerals, the market appears to be assigning a higher value to its recent track record of strong earnings expansion and high net profit margins. Yet, compared to the broader sector, this premium is notable. The company's ratio outpaces industry norms, which may suggest either stronger growth expectations or a risk that valuation could normalize over time.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 24.7x (OVERVALUED)

However, slowing revenue growth and a recent pullback in the share price raise questions about whether USLM’s premium valuation can be sustained in the future.

Find out about the key risks to this United States Lime & Minerals narrative.

Another View: Discounted Cash Flow Perspective

While the market has priced United States Lime & Minerals at a premium compared to peers, our DCF model gives a very different signal. According to this approach, the shares are currently trading at a 32% discount to estimated fair value. This raises the question of whether the market is underappreciating long-term cash flow potential.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out United States Lime & Minerals for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 843 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own United States Lime & Minerals Narrative

If you see things differently or want to dig into the numbers yourself, you can build your own take in just a few minutes. So why not Do it your way

A great starting point for your United States Lime & Minerals research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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