ICL Group (NYSE:ICL) Valuation After Strategic Lithium Project Cuts and Dead Sea Deal Reshape Outlook

ICL Group (NYSE:ICL) is making some important changes after announcing the discontinuation of its planned lithium iron phosphate cathode projects in both the US and Spain. This move comes as government funding was withdrawn, and shifting dynamics in the electric vehicle market have influenced the decision.

See our latest analysis for ICL Group.

Even with ICL’s major strategic pivot and recent moves around its lithium iron phosphate projects, the stock has shown some resilience. While last week’s share price return was a steep -14.1%, its year-to-date share price return stands at a solid 14.1%. The company’s one-year total shareholder return is a remarkable 35.3%, highlighting strong long-term value. However, returns over three years remain in the red, underscoring how momentum has ebbed and flowed as the outlook and risk profile evolved.

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With ICL’s recent challenges and strategic refocus, investors may be wondering whether the current share price reflects fair value or if there is potential for further upside as the market digests the company’s future growth prospects.

Most Popular Narrative: 16% Undervalued

ICL Group's last close price stood at $5.66, while the most followed narrative suggests a fair value of $6.74, implying notable upside potential as investors weigh future growth prospects and risk factors.

The company's focus on cash generation and strengthening free cash flow, which reached $572 million year-to-date, suggests improved financial health and efficiency. This may potentially boost net margins and earnings. There is a strong performance from ICL's specialty-driven business divisions, with a 37% year-over-year EBITDA increase. This highlights ICL's ability to diversify and generate revenue from multiple sources, hedging risks associated with any single market segment.

Read the complete narrative.

Curious what’s sending this narrative valuation higher? Analysts are betting on a fundamental shift built around bigger profits and expanded margins, unlocking surprising future value if their blueprint plays out. Click to get the exact projections and see what’s fueling the optimism in this forecast.

Result: Fair Value of $6.74 (UNDERVALUED)

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

However, ongoing geopolitical disruptions and heavy reliance on phosphate markets could disrupt earnings momentum and challenge the current growth narrative for ICL Group.

Find out about the key risks to this ICL Group narrative.

Another View: Multiples Tell a Cautious Story

The current valuation based on the commonly used earnings ratio suggests ICL trades at 19.9x, which is lower than the US Chemicals industry average of 23.2x, but noticeably higher than the average of its immediate peers at 11.8x. This points to both some relative value and a warning flag, since the market could easily shift in either direction. Could investor sentiment change as fundamentals shift?

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ICL Group 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 857 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 ICL Group Narrative

If you have your own take on ICL Group’s story or want to dig deeper into the numbers, you can build a custom view in just a few minutes. Do it your way

A great starting point for your ICL Group 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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