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Sociedad Química y Minera de Chile S.A. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Simply Wall St

Sociedad Química y Minera de Chile S.A. (NYSE:SQM) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of US$392m missed by 19%, and statutory earnings per share of US$0.17 fell short of forecasts by 27%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sociedad Química y Minera de Chile after the latest results.

View our latest analysis for Sociedad Química y Minera de Chile

NYSE:SQM Past and Future Earnings May 24th 2020
NYSE:SQM Past and Future Earnings May 24th 2020

Taking into account the latest results, the consensus forecast from Sociedad Química y Minera de Chile's twelve analysts is for revenues of US$1.95b in 2020, which would reflect an okay 6.5% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 8.5% to US$1.00. Before this earnings report, the analysts had been forecasting revenues of US$2.05b and earnings per share (EPS) of US$1.04 in 2020. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the US$30.95 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Sociedad Química y Minera de Chile analyst has a price target of US$57.00 per share, while the most pessimistic values it at US$20.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against 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 6.5% revenue growth noticeably faster than its historical growth of 3.7%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 4.7% 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 concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sociedad Química y Minera de Chile. They also downgraded their revenue estimates, although industry data suggests that Sociedad Química y Minera de Chile's revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Sociedad Química y Minera de Chile going out to 2023, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 3 warning signs for Sociedad Química y Minera de Chile you should know about.

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This article by Simply Wall St is general in nature. 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. Thank you for reading.