Sociedad Química y Minera de Chile S.A. : A medium term support level to take advantage of

01/05/2022 | 08:41am EDT

Tommy Douziech

long trade Target price hit

Entry price : 49.75$ | Target : 71.44$ | Stop-loss : 45$ | Potential : 43.6%

The support at 46.59 USD, which is currently being tested, should allow Sociedad Química y Minera de Chile S.A. shares to move back to the upside. Investors have an opportunity to buy the stock and target the $ 71.44.

Summary

• The company has strong fundamentals. More than 70% of companies have a lower mix of growth, profitability, debt and visibility.
• The company has a good ESG score relative to its sector, according to Refinitiv.

Strengths

• Analysts expect a sharply increasing business volume for the group, with high growth rates in the coming years.
• The company's earnings per share (EPS) are expected to grow significantly over the next few years according to the consensus of analysts covering the stock.
• Before interest, taxes, depreciation and amortization, the company's margins are particularly high.
• The group's activity appears highly profitable thanks to its outperforming net margins.
• Thanks to a sound financial situation, the firm has significant leeway for investment.
• Over the past year, analysts have regularly revised upwards their sales forecast for the company.
• Over the last 4 months, analysts have significantly revised upwards the company's estimated sales.
• For the last twelve months, analysts have been gradually revising upwards their EPS forecast for the upcoming fiscal year.
• For the past twelve months, EPS forecast has been revised upwards.
• The difference between current prices and the average target price is rather important and implies a significant appreciation potential for the stock.
• Over the past four months, analysts' average price target has been revised upwards significantly.
• Consensus analysts have strongly revised their opinion of the company over the past 12 months.

Weaknesses

• With an expected P/E ratio at 30.6 and 16.45 respectively for both the current and next fiscal years, the company operates with high earnings multiples.
• The company's "enterprise value to sales" ratio is among the highest in the world.
• The company appears highly valued given the size of its balance sheet.
• Prospects from analysts covering the stock are not consistent. Such dispersed sales estimates confirm the poor visibility into the group's activity.
• The price targets of analysts who cover the stock differ significantly. This implies difficulties in evaluating the company and its business.
• The group usually releases earnings worse than estimated.

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