PLS share price is in focus.
Pilbara Minerals is a leading ASX-listed lithium company, owning 100% of the world’s largest, independent hard rock lithium operation, Pilgangoora, which it acquired in 2014.
Pilbara’s primary business is the exploration, processing and sale of spodumene concentrates (primarily rocks with lithium in them). It sells its focus through “off-take” contracts and spot sales on the Battery Material Exchange (BMX) platform. A good example of an offtake partner is Great Wall (a Chinese car company) or Posco, a South Korean steelmaker.
The demand for lithium has increased steadily in recent years due to advances in electric vehicles and renewable energy technology. Some investors would describe the Pilbara as a ‘pure play’ investment in demand for green tech due to its direct involvement with lithium. However, as a commodity producer, his income is still at the mercy of (sometimes dramatic) fluctuations in the price of spodumene on the world market.
PME shares
Pro Medicus is an established provider of radiology software to hospitals, imaging centers and healthcare groups worldwide.
ProMedics suite of products around radiology information systems (RIS), picture archiving and communication systems (PACS), and advanced visualization solutions. These products support everything from patient scheduling and billing to rapid clinical imaging interpretations and analysis, making the company relevant at every stage of the radiology process.
The company’s flagship product is its Visage software, which allows radiologists to view large image files generated by X-rays on mobile devices. This was not possible before, but now it allows diagnostic decisions to be made on the go with the goal of improving patient outcomes.
Pricing of PLS and PME shares
As a growth company, one way to get a broad estimate on PLS share price is to compare its price-to-sales multiple over time. This can tell us how the company has historically been valued relative to its total revenue.
Currently, shares of Pls Group Ltd trade at a price-to-sales ratio of 14.82x, compared to its 5-year average of 20.35x, meaning its shares are trading below their historical average. This could mean that the share price has fallen, or that sales have increased, or both. In case of PLS, revenue has been increasing for the last 3 years. Of course, context is important – and this is just one evaluation technique. Investment decisions cannot be based on just one metric, but this can be a difficult starting point.
Shares of PME currently trade at a price-to-sales ratio of 89.49x, which compares to its long-term 5-year average of 82.69x. Hence, its shares are trading above their historical averages.
Don’t forget, a simple multiple like this should only be the beginning of your research. Rask websites offer free online investing courses, created by analysts explaining things like discounted cash flow (DCF) and dividend discount models (DDM). They even include free valuation spreadsheets! It is a good idea to use multiple valuation methods to value shares like Pro Medicus Ltd.
