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Sociedad Quimica Y Minera De Chile SA ADR SQM

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Morningstar’s Analysis

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Maintaining $60 FVE as SQM Reports Solid Second-Quarter Results; Shares Undervalued

Seth Goldstein, CFA Senior Equity Analyst

Analyst Note

| Seth Goldstein, CFA |

Sociedad Quimica y Minera de Chile reported solid second-quarter results. Adjusted EBITDA rose 34% year on year, driven by higher lithium, iodine, and fertilizer volumes. Lithium prices were roughly flat year on year but up sequentially as SQM's shorter-term contracts versus its lithium peers allow the company to benefit more quickly from rising prices. This was in line with our full-year outlook that SQM would see sequentially rising prices each quarter. Having updated our model to incorporate the second-quarter results, we maintain our fair value estimate of $60 per share. Our narrow moat rating is also unchanged. At current prices, we view SQM shares as undervalued, trading in 4-star territory.

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Company Profile

Business Description

Sociedad Quimica y Minera de Chile is a Chilean commodities producer with significant operations in lithium (for electric vehicle batteries), specialty potassium fertilizers, iodine (for X-ray contrast media), and solar salts. The company extracts these materials through its high-quality caliche ore and salt brine deposits.

El Trovador 4285, 6th Floor, Las Condes
Santiago, Chile
T +56 224252000
Sector Basic Materials
Industry Chemicals
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 5,647