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.
PME shares
Pro Medicus is an established provider of radiology software for hospitals, imaging centres and healthcare groups worldwide.
The Pro Medicus suite of products centres around radiology information systems (RIS), Picture Archiving and Communication Systems (PACS), and advanced visualisation solutions. These products support everything from patient scheduling and billing to fast medical imaging interpretations and analysis, making the company relevant at every stage of the radiology process.
The company’s flagship product is their Visage software, which allows radiologists to view large image files generated by X-rays remotely on mobile devices. This wasn’t previously possible, but it now allows diagnostic decisions to be made on-the-go with the aim of improving patient outcomes.
PLS & PME share price valuation
As a growth company, one way to put a broad projection 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, Pls Group Ltd shares have a price-sales ratio of 14.82x, 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 PME share price currently trades at a price-sales ratio of 89.49x, which compares to its 5-year long-term average of 82.69x. 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 Pro Medicus Ltd.
