Sociedad Química y Minera de Chile (NYSE:SQM): Revisiting Valuation After Lithium Tailwinds and Capacity Expansion

Sociedad Química y Minera de Chile (NYSE:SQM) is back in focus as strong lithium demand, fueled by electric vehicle growth, collides with the company’s expanding production capacity and improving Specialty Plant Nutrition trends, reshaping the stock’s risk reward profile.

See our latest analysis for Sociedad Química y Minera de Chile.

After a rocky stretch that left its three year total shareholder return still in negative territory, Sociedad Química y Minera de Chile’s 30 day share price return of 19.10 percent and roughly 80 percent year to date gain signal that momentum has meaningfully swung back in its favor as investors refocus on lithium growth and improving fertilizer demand.

If SQM’s rebound has you thinking about where else growth might be hiding, this could be a good moment to explore fast growing stocks with high insider ownership.

Yet with shares now above many analyst targets but still trading at a modest intrinsic discount, investors face a pivotal question: is SQM still undervalued, or is the market already pricing in its future growth?

Most Popular Narrative: 5.7% Overvalued

With Sociedad Química y Minera de Chile closing at $64.97 against a narrative fair value of about $61.44, expectations are running slightly ahead of modelled fundamentals, sharpening the focus on what has to go right.

Analysts have modestly raised their average price target on Sociedad Química y Minera de Chile, lifting fair value from about $56.66 to $61.44 as they factor in firmer lithium price expectations, improving demand forecasts, and a potential narrowing of the company’s valuation discount once the Codelco joint venture structure is clarified.

Read the complete narrative.

Curious what kind of revenue climb, margin reset, and future earnings multiple are embedded in that higher fair value, and how much depends on lithium staying hot and the Codelco deal landing just right, rather than merely good, for shareholders?

Result: Fair Value of $61.44 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering uncertainty around Codelco partnership terms and lithium price volatility could still derail the growth assumptions underpinning today’s richer valuation.

Find out about the key risks to this Sociedad Química y Minera de Chile narrative.

Another Angle on Value

Our SWS DCF model paints a more forgiving picture, suggesting SQM is about 6 percent undervalued at roughly $69 per share. That clashes with the narrative call for modest overvaluation and raises a key question: are analysts underestimating long term cash flows, or is the DCF too generous?

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 Sociedad Química y Minera de Chile 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 909 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 Sociedad Química y Minera de Chile Narrative

If you see the story differently or want to stress test your own assumptions directly against the numbers, you can build a custom narrative in just a few minutes, Do it your way.

A great starting point for your Sociedad Química y Minera de Chile research is our analysis highlighting 3 key rewards and 2 important warning signs 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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