How reliable are SQM's quarterly earnings forecasts?

Sociedad Quimica y Minera de Chile SA (SQM) has shown volatile quarterly earnings over the past year, making it challenging to rely on historical performance for future forecasts. Here's an analysis of SQM's quarterly net income and earnings trends:

1. **Recent Quarterly Net Income**: SQM's net income for the most recent quarter ending on December 31, 2024, was $122.6 million. This is a significant decrease from the previous quarter's net income of $213.59 million, indicating a substantial decline in earnings.

|code|Ticker|Name|Date|Net Income YoY|Net Income|market_code|
|---|---|---|---|---|---|---|
|SQM|SQM.N|Sociedad Quimica y Minera de Chile|2024 Q1|-215.58523986811045|-8.68667E8|169|
|SQM|SQM.N|Sociedad Quimica y Minera de Chile|2024 Q2|-63.013158483795536|2.14807E8|169|
|SQM|SQM.N|Sociedad Quimica y Minera de Chile|2024 Q3|-72.24500559605805|1.33665E8|169|
|SQM|SQM.N|Sociedad Quimica y Minera de Chile|2024 Q4|-40.42759961127308|1.226E8|169|

2. **Growth Rate of Net Income**: The net income growth rate for SQM in the latest quarter was -40.43%. This negative growth rate suggests that SQM has experienced a substantial contraction in earnings, which is a red flag for the reliability of future earnings forecasts.

|code|Ticker|Name|Date|Net Income YoY|market_code|
|---|---|---|---|---|---|
|SQM|SQM.N|Sociedad Quimica y Minera de Chile|2024 Q1|-215.58523986811045|169|
|SQM|SQM.N|Sociedad Quimica y Minera de Chile|2024 Q2|-63.013158483795536|169|
|SQM|SQM.N|Sociedad Quimica y Minera de Chile|2024 Q3|-72.24500559605805|169|
|SQM|SQM.N|Sociedad Quimica y Minera de Chile|2024 Q4|-40.42759961127308|169|

3. **Historical Earnings Trends**: SQM's earnings have been inconsistent over the past year. For instance, the company reported a quarterly adjusted loss of $3.10 per share in June 2024, which is a significant decline from the EPS of $2.03 in the same quarter the previous year. This trend of fluctuating earnings makes it difficult to predict future performance with confidence.
4. **Analyst Expectations**: Analysts have varied expectations for SQM's future earnings. For the quarter ending December 31, 2024, analysts had estimated an EPS of $0.66, which was slightly higher than the actual EPS of $0.42. This suggests that analysts' forecasts may not always accurately capture SQM's actual earnings.
5. **Industry and Economic Factors**: SQM's earnings are likely to be influenced by broader industry trends and economic conditions. The company's revenue and profit margins have been impacted by lower lithium prices quarter over quarter in 2024, although this trend softened in the fourth quarter. Additionally, the company's investment in lithium capacity expansion and potential tax disputes could affect its future earnings.
6. **Institutional Investor Confidence**: Institutional investors have shown interest in SQM, with the Bank of New York Mellon Corp acquiring a new stake in the company. However, the fluctuating earnings and recent decline in net income may raise concerns among investors about the reliability of SQM's future earnings forecasts.

In conclusion, while SQM's quarterly earnings have shown significant volatility, analysts' forecasts remain cautious, reflecting the uncertain market conditions and SQM's strategic investments. The reliability of SQM's quarterly earnings forecasts is currently low due to the company's inconsistent performance and the influence of external factors. Investors should exercise caution and consider these factors when evaluating SQM's future earnings prospects.