Chemical & Mining Co Of Chile Inc (SQM)

Price$76.43Cached quoteAs of 2026-09-05 07:27 UTC

AI: Fair-priced

Price checkThe shares look fair-priced because today's valuation already assumes much of the lithium profit recovery continues.

At about 16 times trailing earnings, the market is not pricing SQM like a distressed miner. Yet first-half 2026 earnings were $3.59 a share; simply repeating that half would put the shares near 11 times full-year earnings. The catch is durability: 2024 earnings were only $2.40 a share after lithium prices collapsed. That wide range means the current valuation already needs a meaningful recovery to persist, but it does not require 2022-like peak profits. On that balance, fair-priced is the most defensible verdict. MarketWatch+1

Big pictureSQM has recovered sharply, but its profits and cash still swing heavily with lithium prices.

History is the main warning. Revenue fell from $10.7 billion in 2022 to $4.5 billion in 2024, while net income dropped from $3.9 billion to $685 million. Operating cash flow swung from $4.1 billion in 2022 to negative $197 million in 2023, then recovered to $1.27 billion in 2024. After capital spending, 2024 free cash flow—cash left after running and investing in the business—was only about $303 million. First-half 2026 profit rebounded to $1.02 billion, showing both strong recovery and strong cyclicality. SQM

Business strengthLow-cost resources and a liquid balance sheet give SQM room to invest through commodity downturns.

SQM's balance sheet can absorb a heavy investment cycle. At mid-2026 it held $3.38 billion of cash against about $5.22 billion of debt, and current assets were 2.6 times current liabilities. Lithium produced 78% of first-half 2026 gross profit, so diversification is limited, although iodine remains a profitable second engine. Capital allocation has been aggressive: 2019-2024 free cash flow totaled roughly $2.5 billion, versus about $4.8 billion of dividends, while a 2021 capital raise added $1.1 billion and 22.4 million Series B shares. Implied shares then stayed near 285.6 million through 2024, limiting recent dilution. SQM+1

What could change the storyLong-term value hinges on lithium staying profitable while new projects earn enough to justify heavy spending.

The bull case is lithium demand above 2.1 million tonnes in 2026 keeping prices near the second-quarter realized level of about $21.8 per kilogram, while Chile capacity passes 300,000 tonnes by end-2027 and Mt Holland later doubles. The bear case is weaker lithium prices colliding with heavy spending: about $3 billion planned for 2026-2028, plus roughly $3 billion for Salar Futuro after approval. The Codelco deal extends Atacama access to 2060, but Codelco controls the venture after 2030; Atacama-derived products were 50.1% of 2025 revenue. SQM+1

AI: News

Quarterly earnings surgeSecond-quarter profit jumped as lithium prices and volumes recovered, lifting expectations for the rest of 2026.

On August 18, SQM reported second-quarter revenue of $2.47 billion and net income of $660 million. Lithium sales reached a record 84.1 thousand tonnes, while the realized Chile lithium price rose to about $21.8 per kilogram. Management raised its 2026 global lithium-demand view above 2.1 million tonnes. Reuters reported the New York shares were up about 2% the next morning before gains eased, supporting a link between the update and investor expectations. SQM+1

Mt Holland expansion approvedSQM committed new capital to double Australian lithium concentrate capacity, adding long-term growth but near-term spending.

On July 21, SQM and Wesfarmers approved the Mt Holland expansion. Nameplate spodumene concentrate capacity is planned to rise from about 380,000 to 760,000 tonnes a year, with SQM's share of project spending estimated at $450 million to $500 million. Construction is expected to begin in the second half of 2027 and first expanded production in the first half of 2030. No reliable standalone share-price reaction was found, so the importance is mainly future volume and lower unit costs. SQM

Codelco merger finalizedThe Codelco partnership secured Atacama access through 2060, while shifting future control and economics toward the state.

On January 27, SQM said Chile's Supreme Court had rejected the remaining appeal, making the Codelco merger fully effective. The joint venture now holds Atacama rights through 2060. SQM manages operations through 2030, but Codelco has preferential economics during that first term; from 2031, Codelco controls the venture and economics follow ownership, with SQM holding just under half. Because Atacama-derived products represented 50.1% of 2025 revenue, this reduces the old 2030 concession cliff but limits long-term control. SQM+1

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
Revenue	$4.58B	$4.53B	$7.47B	$10.71B	$2.86B	$1.82B	$1.94B	$2.27B	$2.16B	$1.94B	$1.73B
Gross profit	$1.35B	$1.33B	$3.08B	$5.74B	$1.09B	$482.9M	$560.1M	$780.2M	$762.5M	$611.0M	$542.7M
Gross margin	29.56%	29.30%	41.18%	53.56%	38.08%	26.57%	28.81%	34.43%	35.34%	31.51%	31.40%
Research & development	—	—	—	—	—	—	$1.7	$1.7	—	—	—
Operating expenses	$283.0M	$261.2M	$230.7M	$205.3M	$162.8M	$180.4M	$126.4M	$113.6M	$144.4M	$162.3M	$174.1M
Operating income	$1.07B	$1.07B	$2.84B	$5.53B	$927.3M	$302.5M	$433.7M	$666.6M	$618.1M	$448.8M	$368.6M
Operating margin	23.37%	23.54%	38.09%	51.64%	32.40%	16.65%	22.31%	29.42%	28.65%	23.14%	21.33%
EBITDA	$1.15B	$1.41B	$3.13B	$5.78B	$1.14B	$506.4M	$635.0M	$887.4M	$858.6M	$698.5M	$640.3M
EBITDA margin	25.05%	31.10%	41.85%	53.93%	39.88%	27.87%	32.67%	39.16%	39.80%	36.02%	37.05%
Net income	$588.1M	$691.8M	$930.3M	$3.91B	$592.2M	$168.4M	$280.6M	$442.1M	$428.4M	$281.9M	$224.5M
Net profit margin	12.85%	15.28%	12.46%	36.55%	20.69%	9.26%	14.44%	19.51%	19.86%	14.54%	12.99%
Basic EPSper basic share	$2.06	$2.40	$3.23	$13.68	$2.10	$0.63	$1.67	$1.67	$1.63	$1.06	$0.84
Diluted EPSper diluted share	$2.06	$2.40	$3.23	$13.68	$2.10	$0.63	$1.67	$1.67	$1.63	$1.06	$0.84