Lithium Argentina (TSX:LAR): Valuation Insights After Pozuelos-Pastos Grandes Scoping Study and New Ganfeng JV

Lithium Argentina (TSX:LAR) shares have attracted attention following the release of a comprehensive Scoping Study for the Pozuelos-Pastos Grandes lithium brine project. This report details major production plans and highlights a new joint venture with Ganfeng Lithium.

See our latest analysis for Lithium Argentina.

On the heels of the Scoping Study news and fresh momentum from recent deals, Lithium Argentina’s 1-week share price return surged nearly 20%. A robust 82% year-to-date share price gain underscores renewed optimism. Steady positive momentum and speculation around new resource development have fueled a 12-month total shareholder return of 55%. This puts recent setbacks in the rearview mirror and reflects stronger confidence in the company’s growth potential.

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The recent flurry of positive updates and surging returns might have investors wondering if Lithium Argentina is trading at an attractive discount or if the market has already priced in the company’s future growth prospects.

Price-to-Book Ratio of 1.1x: Is it justified?

Lithium Argentina is currently trading at a price-to-book (P/B) ratio of 1.1x, which positions the stock at a significant discount to both peer and industry averages. The last close was CA$7.33, making its valuation especially compelling compared to its sector.

The price-to-book ratio measures how much investors are willing to pay for each dollar of net assets. For a company at Lithium Argentina's stage, which is developing projects but not yet reporting meaningful revenue, this metric is often used to value resource or asset-heavy firms, particularly when earnings are negative or volatile.

At 1.1x, Lithium Argentina’s P/B is well below the peer average of 3.6x and the broader Canadian Metals and Mining industry average of 2.6x. This steep discount signals the market may not be recognizing the book value or future potential of the company’s assets and could readjust if upcoming catalyst events shift sentiment.

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

Result: Price-to-Book Ratio of 1.1x (UNDERVALUED)

However, investors should note that a lack of revenue or continued net losses could pressure the share price if project milestones are delayed or if market sentiment shifts.

Find out about the key risks to this Lithium Argentina narrative.

Another View: Discounted Cash Flow Analysis

While the price-to-book approach suggests Lithium Argentina is undervalued, the SWS DCF model offers another perspective. According to this model, shares currently trade around 23% below our fair value estimate. This points to potential upside. The question remains: will the market close this gap, or is there a reason for the discount?

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 Lithium Argentina 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 923 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 Lithium Argentina Narrative

If you want to take a closer look or develop your own viewpoint, you can easily assemble your own analysis using the available data in just a few minutes. Do it your way

A great starting point for your Lithium Argentina 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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