Understanding how Sociedad Química y Minera de Chile SA. (NYSE:SQM) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Sociedad Química y Minera de Chile is doing by comparing its latest earnings with its long-term trend as well as the performance of its chemicals industry peers. Check out our latest analysis for Sociedad Química y Minera de Chile
Did SQM’s recent earnings growth beat the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This allows me to assess various companies in a uniform manner using the latest information. For Sociedad Química y Minera de Chile, its latest trailing-twelve-month earnings is US$427.70M, which compared to the prior year’s level, has increased by a non-trivial 53.69%. Since these values may be somewhat myopic, I’ve estimated an annualized five-year value for Sociedad Química y Minera de Chile’s net income, which stands at US$401.40M This suggests that, generally, Sociedad Química y Minera de Chile has been able to steadily improve its net income over the last few years as well.What’s the driver of this growth? Let’s take a look at if it is solely due to industry tailwinds, or if Sociedad Química y Minera de Chile has seen some company-specific growth. Although both top-line and bottom-line growth rates in the last couple of years, were, on average, negative, earnings were more so. While this has caused a margin contraction, it has lessened Sociedad Química y Minera de Chile’s earnings contraction. Eyeballing growth from a sector-level, the US chemicals industry has been growing its average earnings by double-digit 19.14% over the past twelve months, and a more subdued 6.25% over the last five years. This means that any uplift the industry is gaining from, Sociedad Química y Minera de Chile is able to amplify this to its advantage.
What does this mean?
Though Sociedad Química y Minera de Chile’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Sociedad Química y Minera de Chile to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SQM’s future growth? Take a look at our free research report of analyst consensus for SQM’s outlook.
- Financial Health: Is SQM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.