Sociedad Química y Minera de Chile S.A. (NYSE:SQM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 25% to US$95.23 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the latest consensus from Sociedad Química y Minera de Chile's eleven analysts is for revenues of US$8.7b in 2022, which would reflect a sizeable 101% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 150% to US$11.47. Prior to this update, the analysts had been forecasting revenues of US$5.6b and earnings per share (EPS) of US$6.14 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 16% to US$93.64 per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Sociedad Química y Minera de Chile, with the most bullish analyst valuing it at US$136 and the most bearish at US$50.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Sociedad Química y Minera de Chile's rate of growth is expected to accelerate meaningfully, with the forecast 153% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 5.3% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Sociedad Química y Minera de Chile is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Sociedad Química y Minera de Chile could be worth investigating further.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Sociedad Química y Minera de Chile analysts - going out to 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.