Lithium Argentina (TSX:LAR) Valuation Check After Strong 1 Year Shareholder Returns

Why Lithium Argentina is on investors’ radar today

Lithium Argentina (TSX:LAR) has been catching attention after a recent stretch of strong share price performance, with gains over the past week, month and past 3 months prompting fresh interest from investors.

See our latest analysis for Lithium Argentina.

Those short term gains sit on top of a 20.0% year to date share price return, while the 1 year total shareholder return of 128.31% points to momentum that has been building rather than fading.

If Lithium Argentina’s run has caught your eye, it could be a good moment to broaden your watchlist and see how it compares with fast growing stocks with high insider ownership.

So with Lithium Argentina posting triple digit 1 year returns and the share price now sitting close to analyst targets, you have to ask yourself: is there still an opportunity here, or is the market already pricing in future growth?

Price-to-book of 1.5x: Is it justified?

Lithium Argentina is trading on a P/B of 1.5x, which, alongside the recent CA$9.84 share price, suggests the market is not pricing it at a premium to peers.

P/B compares the market value of the company to the book value of its net assets. It is a common reference point for resource and materials names that have limited or no current revenue.

For Lithium Argentina, a 1.5x P/B sits well below both the Canadian Metals and Mining industry average of 3.1x and the peer average of 4.1x. This implies the market is pricing its asset base and future profit potential more conservatively than many similar companies.

Put simply, the stock trades at less than half the industry and peer P/B levels. This wide gap signals investors are either more cautious on its projects or have not pushed the valuation up to sector norms yet.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-book of 1.5x (UNDERVALUED)

However, you also have to weigh project execution and the current US$80.53 million net loss, because any delays or funding pressures could quickly change the story.

Find out about the key risks to this Lithium Argentina narrative.

DCF check: A tighter view on value

While the 1.5x P/B ratio makes Lithium Argentina look inexpensive next to peers, our DCF model paints a more cautious picture. On this view, the current CA$9.84 share price sits above an estimated fair value of CA$9.41, which points to a slight premium rather than a clear bargain. With two signals pointing in different directions, which one do you think tells the more useful story for you?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Lithium Argentina for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 884 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Lithium Argentina Narrative

If you see the numbers differently or simply prefer to test your own assumptions against the data, you can build a personalised view in minutes with Do it your way.

A great starting point for your Lithium Argentina research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Lithium Argentina is on your radar, do not stop there. Broaden your opportunity set with a few targeted stock ideas that you can act on today.

• Spot potential value candidates by checking out these 884 undervalued stocks based on cash flows, where prices and underlying cash flows may be pulling in different directions.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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