SQM
Sociedad Química y Minera de Chile S.A. (NYSE: SQM) is a specialty chemicals company that produces a variety of raw materials, including lithium. SQM, as it is commonly known, has seen its stock price fall by more than 39% over the past 12 months. The price of lithium has dropped by more than 57% over the same period, and a government plan to create a state-owned lithium company sent shares tumbling by 18% on the day it was announced. In the past month, the stock has dropped 17.5%. Safe to say that state control of Chile’s lithium industry is not widely viewed as a plus for that industry.
Of 16 brokerages covering the stock, 10 have a Buy or Strong Buy rating and five have Hold ratings. At a share price of around $66.00, the implied upside to a median price target of $89.00 is 34.8%. Based on the high price target of $136.00, the upside potential is 106%.
Second-quarter revenue is forecast at $2.13 billion, down 6.1% sequentially and by 18.1% year over year. Adjusted EPS are forecast at $2.64, up 0.4% sequentially but 12.3% lower year over year. For the full 2023 fiscal year, analysts expect SQM to report EPS of $11.25, down 17.7%, on sales of $9.85 billion, down 8.1%.
SQM stock trades at 5.9 times expected 2023 EPS, 6.5 times estimated 2024 earnings of $10.12 and 7.4 times estimated 2025 earnings of $8.89 per share. The 52-week trading range is $60.21 to $115.72. The company pays an annual (variable) dividend of $8.74 (yield of 12.98%). Total shareholder return over the past year was negative 34.75%.
StoneCo
StoneCo Ltd. (NASDAQ: STNE) provides fintech services to merchants and their partners in Brazil. The company is headquartered in the Cayman Islands and is a subsidiary of HR Holdings. Over the past 12 months, its shares have added about 11.4%, including a year-to-date jump of 42.3%. Warren Buffett’s Berkshire Hathaway owns about 10.7 million shares (3.4%) of StoneCo stock and 107.1 million shares (2.3%) of another Brazilian fintech firm, Nu Holdings, which is expected to post its results Tuesday’s closing bell.
Analysts have adopted a show-me approach to StoneCo, with 11 of 19 having a Hold rating and 7 more rating the stock a Buy. At a share price of around $13.50, the upside potential based on a median price target of $15.08 is 11.7%. At the high price target of $19.55, the upside potential is about 44.8%.
StoneCo is expected to report second-quarter revenue of $583.15 million, up 9.0% sequentially and 32.4% higher year over year. Adjusted EPS are forecast at $0.17, up 21.4% sequentially and up from $0.05 in the year-ago quarter. For the full 2023 fiscal year, analysts expect EPS of $0.73, up 127.1%, on revenue of $2.35 billion, up 29.8%.
StoneCo’s share price to earnings multiple for the 2023 fiscal year is 18.3. For the 2024 fiscal year, the multiple to estimated EPS of $0.94 is 14.3, and for 2025, the multiple is 11.7 times estimated EPS of $1.15. The stock’s 52-week trading range is $8.07 to $14.83. StoneCo does not pay a dividend, and total shareholder return for the past year was 11.36%.
Originally published at 24/7 Wall St.
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