A Look at SQM (NYSE:SQM) Valuation as Earnings and Analyst Optimism Drive Improved Outlook

Sociedad Química y Minera de Chile (NYSE:SQM) drew investor attention after its latest quarterly results showed substantial gains in both revenue and net income. These results were supported by record lithium sales and rising lithium prices.

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

It’s been an exciting stretch for Sociedad Química y Minera de Chile, as upbeat earnings, higher sales guidance, and Scotiabank’s renewed optimism have all coincided with the stock’s remarkable momentum. Most recently, there has been a 41% 3-month share price gain and a 67% 1-year total shareholder return. Enthusiasm is building, with the market reacting to the company’s positive guidance and improving outlook for lithium and iodine markets.

If this momentum has you thinking bigger, now’s an excellent time to broaden your search and explore fast growing stocks with high insider ownership.

But with shares rallying so steeply on strong results and upbeat guidance, investors now face a big question: is Sociedad Química y Minera de Chile still trading below its true worth, or is all the future growth already priced in?

Most Popular Narrative: 13.5% Overvalued

With Sociedad Química y Minera de Chile trading at $64.32 and the most-followed narrative fair value set at $56.66, there is a clear divide between market price and narrative-driven valuation. This dynamic has focused attention on growth drivers and sector tailwinds.

Expansion of lithium and specialty chemical production capacity positions the company for sustained revenue and margin growth, supported by strong demand and tight global supply. Operational efficiency, diverse product streams, and rising barriers to entry protect the company's competitive strength and earnings resilience against market volatility.

Read the complete narrative.

What assumptions power this narrative’s price target? The key: ambitious forecasts for revenue, margin improvement, and a future earnings multiple only market leaders command. Want to discover the specific financial leaps and strategic turns underpinning this valuation? The numbers behind this scenario might surprise you. Get the full story in the full narrative.

Result: Fair Value of $56.66 (OVERVALUED)

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

However, ongoing uncertainty over Chilean lithium royalties and rapid shifts in global lithium pricing could quickly undermine current bullish expectations for Sociedad Química y Minera de Chile.

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

Another View: DCF Model Shows Undervaluation

While narrative-driven estimates point to Sociedad Química y Minera de Chile being overvalued, our DCF model suggests the stock is actually trading at about 5% below fair value. This stands in sharp contrast to standard multiples metrics and raises the question: which method should guide your next move?

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 920 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 think the story could unfold differently or want to dig into the details on your terms, you can easily build your own 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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