Lynas Rare Earths (ASX:LYC) Could Be Trading At A 27% Premium On Full Year Earnings
Why Lynas Rare Earths Stock Is Back in Focus After Full Year Results
Lynas Rare Earths (ASX:LYC) attracted fresh attention after reporting full year 2026 earnings, with sales of A$977.95 million and net income of A$222.35 million for the period to June 30.
The strong earnings update has come after a choppy period for Lynas Rare Earths shareholders, with the stock at A$15.32 after a 1 day share price return of 0.39%, while the 90 day share price return is down 15.64% and the 1 year total shareholder return is 6.76%.
Compare Lynas Rare Earths with other rare earth producers by scanning the 30 best rare earth metal stocks that are also catching attention after recent earnings updates.
Lynas Rare Earths has posted strong full year numbers while the share price has drifted over the past quarter. The business looks solid. The next step is to test whether A$15.32 fairly reflects that.
Most Popular Narrative: 36.5% Overvalued
The most followed narrative on Lynas Rare Earths pegs fair value at A$11.23 per share, well below the last close at A$15.32. That gap hinges on how much credit you give to expansion projects and pricing assumptions.
At A$11.226 per share, Lynas Rare Earths (ASX: LYC) appears reasonably valued when considering its existing operations, recently completed expansion work and stronger rare earth pricing. With approximately 1.01 billion shares on issue, the assessed price values the company’s shares at around A$11.3 billion.
According to Jamesiskindacool, this valuation leans heavily on how far production can scale and how rare earth pricing holds up across the cycle. The narrative also weighs how much of the current cash pile comes from operations versus equity raising. It also explores which earnings and margin assumptions sit underneath that A$11.23 figure and how much value is being set aside for future projects.
Result: Fair Value of A$11.23 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Lynas Rare Earths still faces risks if rare earth prices soften or if expansion projects and supply agreements deliver less volume or margin than expected.
Find out about the key risks to this Lynas Rare Earths narrative.
Another View On Lynas Rare Earths Valuation
While the leading narrative sees Lynas Rare Earths as overvalued at A$15.32 compared with a fair value of A$11.23, the SWS DCF model points the other way. It estimates fair value at A$22.48, which frames the stock as trading at a meaningful discount.
This split between a narrative built on earnings multiples and a cash flow based model leaves investors with a real question. Which set of assumptions feels more realistic for how Lynas Rare Earths might convert its projects and contracts into long term cash generation, and how much margin of safety is enough at today’s price.
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 Lynas Rare Earths 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 10 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
If the mixed signals in this Lynas Rare Earths story leave you undecided, act promptly and review the numbers yourself. Then weigh up the 3 key rewards
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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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