PLS share price 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 to find, process, and sell spodumene concentrate (basically rocks with lithium in them). It sells its concentrate through “offtake” agreements and spot sales on the Battery Material Exchange (BMX) platform. A good example of an offtake partner is Great Wall (the Chinese car company) or POSCO, a South Korean steelmaker.
Demand for lithium has grown steadily in recent years on the back of developments in electric vehicles and renewable energy technology. Some investors would call Pilbara a ‘pure play’ investment in demand for green tech given their direct involvement with lithium. However, as a commodities producer, its revenue is still at the mercy of (sometimes dramatic) fluctuations in the price of spodumene in the global market.
WTC shares
Founded in 1994 by Richard White and Maree Isaacs, WiseTech Global develops cloud-based software solutions for the international and domestic logistics industries.
WiseTech offers a comprehensive suite of products that support various logistics functions, including forwarding and customs, landside transport, rates and contracts, warehousing, and transport management systems.
Its flagship software, CargoWise, is a market-leading platform widely adopted by the logistics industry. It is used by all 25 of the largest global freight forwarders and 46 of the top 50 third-party logistics providers, cementing its reputation as an industry leader.
PLS share price valuation
As a growth company, one way to put a broad estimate on the PLS share price could be 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, Pilbara Minerals Ltd shares have a price-sales ratio of 6.03x, compared to its 5-year average of 20.35x, meaning its shares are trading lower than their historical average. This could mean that the share price has fallen, or sales have increased, or both. In the case of PLS, revenue has been growing over the last 3 years. Of course, context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric, but this can be a rough starting point.
The WTC share price currently trades at a price-sales ratio of 40.15x, which compares to its 5-year long-term average of 31.86x. So, its shares are trading above their historical average. Don’t forget, a simple multiple like this should only be the start of your research. The 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’s a good idea to use multiple valuation methods to value a share like WiseTech Global Ltd.
