Assessing Israel Chemicals (TASE:ILCO) Valuation After Recent Share Price Gains

Israel (TASE:ILCO) has recently caught the eye of investors, with its performance over the past year showing a meaningful turnaround. Shares have risen 28% in the past 12 months, even though longer-term returns remain mixed.

See our latest analysis for Israel.

Israel’s 1-year total shareholder return of 0.28% marks a quiet but positive shift, suggesting that recent momentum is edging slightly upward. While big news hasn’t dominated headlines lately, the gradual improvement could indicate early optimism building around the stock’s longer-term potential.

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With shares climbing in recent months, investors face a crucial question: is Israel’s current valuation an underappreciated opportunity, or has the market already factored in any potential growth ahead?

Price-to-Earnings of 15.6x: Is it justified?

ILCO is currently trading at a price-to-earnings (P/E) ratio of 15.6x, which appears attractively valued when compared to both its peers and the wider industry. The last close price sits at ₪1034.3, reinforcing the case for potential undervaluation relative to the market.

The price-to-earnings ratio measures how much investors are willing to pay per unit of earnings, serving as a key metric in evaluating profitability and market sentiment for companies in the chemicals sector like ILCO. A lower-than-average P/E ratio can sometimes signal undervalued shares, particularly when the company has a positive earnings track record.

ILCO’s P/E stands well below the Asian Chemicals industry average of 23.7x and the peer average of 34.6x. This sizeable discount suggests the market may not fully recognize ILCO's ability to generate strong earnings, despite recent earnings growth over five years and high-quality reporting. Such a gap can present a potential catch-up opportunity if investor sentiment changes.

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

Result: Price-to-Earnings of 15.6x (UNDERVALUED)

However, slower recent returns and uncertain earnings growth remain risks that could quickly shift sentiment or limit the long-term upside of the stock.

Find out about the key risks to this Israel narrative.

Another View: What Does the SWS DCF Model Say?

Looking at Israel’s valuation through the SWS DCF model provides another perspective. This approach estimates that shares are trading around 11.6% below their calculated fair value, suggesting the stock could have further upside. However, does a discounted price always mean an obvious buying opportunity?

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 Israel 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 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 Israel Narrative

It’s worth exploring the numbers for yourself and drawing your own conclusions. Building a personalized view takes just minutes—Do it your way.

A great starting point for your Israel research is our analysis highlighting 1 key reward 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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