Is Sociedad Quimica y Minera de Chile (SQM) stock price below fair value?
Sociedad Quimica y Minera de Chile (SQM) receives a strong valuation ranking of 86 from Investors Observer data analysis. The proprietary ranking system focuses on the underlying health of a business by analyzing its stock price, earnings, and rate of growth. SQM is worth better than 86% of stocks based on these valuation analyzes. Investors primarily focused on buy and hold strategies will find the valuation ranking relevant to their goals when making investment decisions.
SQM has a 12-month price-to-earnings (PE) ratio of 65.1. The historical average of around 15 shows low value for SQM stock as investors pay higher stock prices relative to company earnings. SQM’s high PE ratio shows that the company has recently traded above its fair market value. Its 12-month earnings per share (EPS) of 1.55 does not justify the current share price. However, leakage PE ratios do not take into account the company’s projected growth rate, so many newer companies have high PE ratios due to high growth potential attracting investors despite insufficient profits. SQM’s 12-month PEG to growth ratio (PEG) of 1.26 is considered mediocre as the market overstates SQM relative to the company’s expected earnings growth. SQM’s PEG is derived from its forward price / earnings ratio divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and the stock price. Due to their integration of more fundamentals of a company’s overall health and their focus on the future rather than the past, PEG ratios are one of the most widely used valuation metrics by analysts today. ‘hui.
Overall, these valuation metrics paint a pretty poor picture for SQM at its current price due to an overvalued PEG ratio despite strong growth. SQM’s PE and PEG are below the market average, resulting in a valuation score of 86. Click here for the full report on the Sociedad Quimica y Minera de Chile (SQM) share.