Value
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.9 |
| P/S | 7.6 |
| EV/EBITDA | 4.4 |
| Fwd P/E | 9.1 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 11.6x
- ▸PEG: 0.33
- ▸Attractively valued
SQM · Why this verdict
Why Sociedad Quimica y Minera (SQM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.6/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
SQM is rated as having best-in-class margins among specialty chemicals peers, with an operating margin component scoring 10.0 out of 10 and net margins of approximately 15%, reflecting the company's access to high-grade lithium brine deposits that give it structural cost advantages. Peer-rank breakdown | Net margins remain above 10% over the next 4 reported quarters, demonstrating that even in a soft lithium pricing environment, the cost structure advantage protects the margin floor. | →Stable |
| CounterBest-in-class margins have not prevented 4 consecutive earnings misses, which implies that pricing pressure is overwhelming even the structural cost advantage; if lithium prices decline by more than 20% from current levels, margins could compress below 8%. | ||
SQM has grown revenue at 70% year-over-year, the highest growth score in the model at 10.0 out of 10, and is ranked as an industry growth leader among specialty chemicals peers at 9.44 out of 10 on growth rank, indicating structural demand for its lithium and specialty nutrient products. Growth breakdown | Revenue growth rate remains above 30% year-over-year in at least 2 of the next 4 reported quarters, confirming that the growth is sustained by demand rather than being a one-period statistical anomaly from a low base. | →Stable |
| CounterRevenue grew 70% but earnings missed in all 4 of the last quarters by an average of -20%, suggesting that input costs, pricing pressure on lithium, or one-time factors are consuming the revenue gains before they reach profitability. | ||
Free cash flow represents 210% of net income and the Piotroski financial strength score is 9 out of 9, indicating that despite the earnings miss streak, the business generates genuine cash far in excess of reported accounting profits, and balance sheet health is broadly confirmed across all nine criteria. Quality breakdown | Free cash flow as a percentage of net income remains above 150% over the next 4 reported quarters, confirming that the cash conversion advantage is structural and not dependent on reversing the current earnings miss pattern. | →Stable |
| CounterFour consecutive earnings misses averaging -20% against a company with 210% free cash flow conversion suggests either the accounting income is artificially depressed by non-cash charges or the free cash flow calculation excludes significant maintenance or sustaining capital requirements. | ||
SQM has missed analyst earnings estimates in all 4 of the last reported quarters, with an average miss of -20.5% including a severe -42% miss in August 2025 and a -18% miss most recently, indicating a systematic gap between what analysts expect and what the company delivers. Earnings | The miss streak ends: the company delivers earnings at or above consensus in at least 2 of the next 4 quarters as lithium price stabilization or cost management allows actual results to meet guidance. | →Stable |
| CounterFour consecutive misses averaging -20% almost certainly reflects structural pricing pressure in lithium markets rather than one-time events; lithium carbonate prices have been in a multi-year downturn, and SQM's costs may not adjust quickly enough to protect profitability. | ||
SQM is rated as having best-in-class margins among specialty chemicals peers, with an operating margin component scoring 10.0 out of 10 and net margins of approximately 15%, reflecting the company's access to high-grade lithium brine deposits that give it structural cost advantages.
→StablePeer-rank breakdown
- Expectation
- Net margins remain above 10% over the next 4 reported quarters, demonstrating that even in a soft lithium pricing environment, the cost structure advantage protects the margin floor.
CounterBest-in-class margins have not prevented 4 consecutive earnings misses, which implies that pricing pressure is overwhelming even the structural cost advantage; if lithium prices decline by more than 20% from current levels, margins could compress below 8%.
SQM has grown revenue at 70% year-over-year, the highest growth score in the model at 10.0 out of 10, and is ranked as an industry growth leader among specialty chemicals peers at 9.44 out of 10 on growth rank, indicating structural demand for its lithium and specialty nutrient products.
→StableGrowth breakdown
- Expectation
- Revenue growth rate remains above 30% year-over-year in at least 2 of the next 4 reported quarters, confirming that the growth is sustained by demand rather than being a one-period statistical anomaly from a low base.
CounterRevenue grew 70% but earnings missed in all 4 of the last quarters by an average of -20%, suggesting that input costs, pricing pressure on lithium, or one-time factors are consuming the revenue gains before they reach profitability.
Free cash flow represents 210% of net income and the Piotroski financial strength score is 9 out of 9, indicating that despite the earnings miss streak, the business generates genuine cash far in excess of reported accounting profits, and balance sheet health is broadly confirmed across all nine criteria.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income remains above 150% over the next 4 reported quarters, confirming that the cash conversion advantage is structural and not dependent on reversing the current earnings miss pattern.
CounterFour consecutive earnings misses averaging -20% against a company with 210% free cash flow conversion suggests either the accounting income is artificially depressed by non-cash charges or the free cash flow calculation excludes significant maintenance or sustaining capital requirements.
SQM has missed analyst earnings estimates in all 4 of the last reported quarters, with an average miss of -20.5% including a severe -42% miss in August 2025 and a -18% miss most recently, indicating a systematic gap between what analysts expect and what the company delivers.
→StableEarnings
- Expectation
- The miss streak ends: the company delivers earnings at or above consensus in at least 2 of the next 4 quarters as lithium price stabilization or cost management allows actual results to meet guidance.
CounterFour consecutive misses averaging -20% almost certainly reflects structural pricing pressure in lithium markets rather than one-time events; lithium carbonate prices have been in a multi-year downturn, and SQM's costs may not adjust quickly enough to protect profitability.
TrendMatrix Research · core thesis
Engine thesis — one sentence
SQM has grown revenue 70% year-over-year and leads its specialty chemicals peer group on growth, with a Piotroski score of 9 out of 9 and free cash flow at 210% of net income, but has missed analyst earnings estimates in all 4 of the last reported quarters by an average of -20.5%, and recent negative news sentiment has triggered a downward thesis modifier.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.5 |
| ROA | 4.8 |
| Gross margin | 2.9 |
| Op margin | 10.0 |
| Net margin | 7.7 |
| Current ratio | 9.3 |
| FCF quality | 10.0 |
| Moat | 6.1 |
| Piotroski F | 10.0 |
- ▸Strong margins: 15%
- ▸Excellent cash conversion: 210% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 70% YoY
Momentum
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 2.2 |
- ▸Uptrend pullback (RSI 34) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.4 |
| Price target | 7.3 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.4 |
| quality rank | 7.9 |
| growth rank | 9.5 |
- ▸Best-in-class margins
- ▸Industry growth leader
Technical
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.4 |
| support resistance | 7.6 |
| 52w position | 4.9 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| days to cover | 9.5 |
| volatility | 1.4 |
| put call | 4.9 |
| implied vol | 3.0 |
| beta | 7.0 |
| debt equity | 7.2 |
- ▸High IV: 62%
Catalyst
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 5.2 |
- ▸Earnings concerns: 0B/4M
- ▸Dividend: 142.0%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=-1Passed (7)
- MOMENTUM:4.9>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:45d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.5<1.5@spot
Warning (1)
- MOMENTUM:4.9<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
0.52
Upside
+4.6%
Downside
8.9%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:4.9>=4.5. Top dim: Growth at 10.0; weakest: Catalyst at 3.0. No conviction either direction.
The strongest dimensions are Growth at 10.0, Quality at 7.3, and Value at 7.1; the weakest are Catalyst at 3.0, Momentum at 4.9, and Insider at 5.0. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.52 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Revenue Growth Leader
Trip ifRevenue growth rate falls below 10% year-over-year in any single reported quarter, indicating the high-growth thesis is not being sustained at the pace required to justify the current valuation.
- P2High Quality Cash Conversion
Trip ifFree cash flow falls below 100% of net income for 2 consecutive quarters, indicating the cash conversion advantage is eroding alongside the earnings miss pattern.
- P3Four Quarter Earnings Miss Streak
Trip ifEarnings surprise falls below -25% in any single quarter, or misses continue in at least 3 of the next 4 quarters, confirming that the miss pattern is structural rather than cyclical.
- P4Peer Best Margins Specialist
Trip ifNet margin declines below 8% for 2 consecutive quarters, indicating that lithium pricing pressure has overcome the structural cost advantage of the brine deposit operations.