Don't Judge Sociedad Quimica y Minera on Technicals Alone - Check Its Fundamentals!

Now trading at a price of $79.2, Sociedad Quimica y Minera has moved 3.4% so far Friday.

Sociedad Quimica y Minera shares moved -5.2% over the last 52 weeks, with a high of $115.76 and a low of $69.75. During this time, the stock basically tracked the performance of the S&P 500. As of January 2022, the company's 50-day average price is $84.0.

Sociedad Química y Minera de Chile S.A. produces and distributes specialty plant nutrients, iodine and its derivatives, lithium and its derivatives, potassium chloride and sulfate, industrial chemicals, and other products and services. The large-cap Industrials company has 6,997 full time employees and is based in Santiago de Chile, Chile. Sociedad Quimica y Minera has returned a 10.1% dividend yield over the last 12 months.

Snapshot of the Company's Strong operating Margins:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $1,944 $1,817 $2,862 $10,711
Revenue Growth n/a -6.51% 57.51% 274.19%
Gross Margins 28.8% 26.6% 38.1% 53.6%
Gross Margins Growth n/a -7.64% 43.23% 40.68%
Operating Margins 22.4% 16.7% 32.2% 51.8%
Operating Margins Growth n/a -25.45% 92.81% 60.87%
Net Margins 14.31% 9.05% 20.45% 36.47%
Net Margins Growth n/a -36.76% 125.97% 78.34%
Earnings Per Share $1.05 $0.62 $2.05 $13.68
EPS Growth n/a -40.95% 230.65% 567.32%
Diluted Shares (MM) 265 265 286 286
Free Cash Flow (MM) $103 -$140 $358 $3,172
FCF Growth n/a -235.73% 355.56% 786.62%
Capital Expenditures (MM) -$324 -$322 -$465 -$905
Net Debt / EBITDA 2.53 4.51 1.13 0.03

Sociedad Quimica y Minera Is Reasonably Valued:

Compared to the Industrials sector's average of 20.49, Sociedad Quimica y Minera has a trailing twelve month P/E ratio of 5.8 and, according to its EPS guidance of 11.24, an expected P/E ratio of 7.0. Sociedad Quimica y Minera's PEG ratio is 0.08 based on its 80.9% compound average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 18.4%, because the growth rate implied by Sociedad Quimica y Minera's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 0.33, which still suggests that company's shares are possibly undervalued.

Sociedad Quimica y Minera's P/B ratio is 4.6 compared to its sector average of 3.78. The company is likely overvalued in terms of its equity. The company's shares are currently trading 93.4% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 4.35 * 17.143) = $40.96

Sociedad Quimica y Minera's elevated P/B ratio notwithstanding, the company's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued.

Most of the Market Indicators on Sociedad Quimica y Minera Are Negative:

15 analysts are following Sociedad Quimica y Minera and have set target prices ranging from $80.0 to $145.0 per share. On average, they have given the company a rating of buy. At the current price of $79.2, SQM is trading -30.13% away from its average analyst target price of $113.35 per share, implying an analyst consensus of strong upside potential for the stock.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.