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Sigma Lithium (TSE:SGML)
:SGML
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Sigma Lithium
(NASDAQ:SGML)50Neutral
Positive Factors
Production Performance
Sigma has impressively ramped up production, with 4Q24 preliminary results indicating a run-rate of 300ktpa – above the 2025 production target of 270ktpa.
Valuation and Pricing Risk
Favorable valuation and more upside risk vs downside risk in lithium pricing.
Negative Factors
Price Expectations
Lowering 2025 price, risk skewed positive With oversupply increasing further in 2025, minimal industry discipline, and inventory levels remaining stagnant, we have lowered our price recovery expectations for 2025.
Sigma Lithium (SGML) vs. S&P 500 (SPY)
Market Cap
$1.75B
Dividend YieldN/A
Average Volume (3M)7.65K
Price to Earnings (P/E)―
Beta (1Y)1.91
Revenue Growth72.76%
EPS Growth38.06%
CountryCA
Employees523
SectorBasic Materials
Sector Strength56
IndustryMining
Share Statistics
EPS (TTM)-0.65
Shares Outstanding111,827,255
10 Day Avg. Volume10,290
30 Day Avg. Volume7,650
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)8.53
Price to Cash Flow (P/CF)9.90
P/FCF Ratio9.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$26.34Price Target Upside68.22% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Sigma Lithium Business Overview & Revenue Model
Company DescriptionSigma Lithium (SGML) is a leading lithium mining and production company focused on developing sustainable and environmentally responsible lithium extraction processes. The company is primarily involved in the exploration and production of lithium resources, which are crucial for the manufacturing of batteries used in electric vehicles and renewable energy storage. Sigma Lithium operates primarily in the battery metals sector, with its flagship project located in Brazil, known for its significant lithium reserves.
How the Company Makes MoneySigma Lithium generates revenue primarily through the extraction and sale of high-purity lithium concentrate, which is a critical component for battery manufacturers. The company's revenue model is centered around selling its lithium products to battery producers and technology companies engaged in the electric vehicle and renewable energy sectors. Sigma Lithium's earnings are significantly influenced by the global demand for lithium-ion batteries, partnerships with major battery manufacturers, and its ability to efficiently and sustainably produce lithium. Additionally, the company's strategic location in Brazil allows it to capitalize on favorable mining conditions and proximity to growing markets in electric mobility and energy storage.
Sigma Lithium Financial Statement Overview
Summary
Sigma Lithium is experiencing revenue growth but struggles with profitability, reflected in negative net profit and EBIT margins. A moderately leveraged balance sheet with significant debt reliance and negative return on equity highlights financial instability. However, turning free cash flow positive shows potential for improvement through better cash management.Income Statement
The income statement shows a challenging financial situation for Sigma Lithium. Despite achieving revenue growth, the company experiences negative profitability with a gross profit margin of 13.24% and a net profit margin of -37.15% for TTM. The EBIT and EBITDA margins are also negative, indicating operational inefficiencies. There is a positive revenue growth rate of 6.39% from the previous year, but the company needs to address its cost management to improve its profitability.35
Negative
Balance Sheet
Sigma Lithium's balance sheet reveals a moderately leveraged position with a debt-to-equity ratio of 1.68 for TTM, indicating significant reliance on debt financing. The return on equity is negative at -48.43%, reflecting the company's unprofitability. However, the equity ratio stands at 29.67%, suggesting a decent level of equity financing. Improving profitability and managing debt levels are crucial for enhancing financial stability.45
Neutral
Cash Flow
Cash flow analysis shows signs of improvement for Sigma Lithium. The company has turned its free cash flow positive to $10.85 million in TTM, indicating better cash management. The operating cash flow to net income ratio is -0.58, which suggests the company generates better operating cash flow relative to its net losses. The free cash flow to net income ratio is -0.15, which also shows a positive trend. Continued focus on improving cash flow generation is essential.50
Neutral
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 0.00 | 181.23M | 0.00 | 0.00 | 0.00 | 0.00 | Gross Profit |
| -79.54K | 88.90M | -102.00K | -57.61K | -59.15K | -67.53K | EBIT |
| -56.25M | -21.63M | -121.20M | -31.93M | -1.60M | -3.98M | EBITDA |
| -60.00M | -4.91M | -126.68M | -31.99M | -1.57M | -3.91M | Net Income Common Stockholders |
| -57.46M | -38.25M | -132.10M | -34.21M | -1.99M | -5.67M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 4.16M | 64.40M | 96.35M | 154.31M | 13.54M | 103.64K | Total Assets |
| 19.08M | 487.24M | 308.91M | 193.78M | 33.20M | 20.93M | Total Debt |
| 5.04M | 176.63M | 3.67M | 514.52K | 5.14M | 4.16M | Net Debt |
| 879.23K | 112.23M | -92.69M | -153.79M | -8.40M | 4.06M | Total Liabilities |
| 7.69M | 272.95M | 125.80M | 8.72M | 11.44M | 12.19M | Stockholders Equity |
| 11.38M | 214.28M | 183.11M | 185.06M | 21.76M | 8.74M |
| Cash Flow | Free Cash Flow | ||||
| -47.46M | -76.57M | -133.09M | -22.86M | -3.77M | -3.23M | Operating Cash Flow |
| -8.03M | -30.79M | -5.44M | -4.26M | -2.42M | 409.73K | Investing Cash Flow |
| -39.43M | -82.22M | -132.53M | -18.60M | -2.38M | -4.89M | Financing Cash Flow |
| 130.93M | 77.83M | 79.79M | 165.15M | 17.62M | 377.61K |
Sigma Lithium Technical Analysis
Negative
15.66
Price Trends
16.53
Negative
17.51
Negative
16.94
Negative
Market Momentum
0.08
Negative
42.91
Neutral
54.93
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SGML, the sentiment is Negative. The current price of 15.66 is below the 20-day moving average (MA) of 16.38, below the 50-day MA of 16.53, and below the 200-day MA of 16.94, indicating a bearish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 42.91 is Neutral, neither overbought nor oversold. The STOCH value of 54.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:SGML.
Sigma Lithium Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
50 Neutral | $1.75B | ― | -38.77% | ― | 72.76% | 38.06% | |
49 Neutral | C$115.46M | 74.65 | 2.13% | ― | ― | ― | |
47 Neutral | $2.64B | -4.00 | -31.55% | 3.33% | 2.93% | -29.90% | |
43 Neutral | $18.06M | ― | -5.00% | ― | ― | -1118.18% | |
42 Neutral | C$129.92M | ― | -408.27% | ― | ― | 39.98% | |
42 Neutral | $904.09M | ― | -4.13% | ― | ― | ― |
* Basic Materials Sector Average
Performance Comparison
TSE:SGML
Sigma Lithium
15.66
-3.94
-20.10%
TSE:AVL
Avalon Advanced Materials
0.03
-0.06
-64.71%
TSE:CRE
Critical Elements
0.53
-0.09
-14.52%
TSE:LTH
Lithium Ionic Corp
0.84
-0.08
-8.70%
TSE:LAC
Lithium Americas Corp.
4.14
-3.43
-45.31%
Sigma Lithium Earnings Call Summary
Earnings Call Date: Nov 15, 2024 | % Change Since: -15.67% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
Sigma Lithium demonstrated strong operational and financial performance with successful strategic shifts and expansion plans. However, challenges with provisional pricing adjustments and mobile crusher costs were noted. Overall, the positive aspects significantly outweigh the challenges.Highlights
Operational Excellence Achieved
Sigma Lithium exceeded its production targets, achieving 60,237 dry metric tonnes, with a record plant DMS recovery of 70% and global recoveries of 55%. The company also advanced the construction of a second plant and maintained a strong safety record with 43 days without accidents.
Financial Performance and Cash Flow
Sigma delivered robust financial performance with $44.2 million in sales revenue, $34.5 million in operational cash flow, and a low cash cost of $513 per tonne. The company maintained a healthy cash balance of $65.7 million and signed a $487 million BNDES Development loan with favorable terms.
Commercial Strategy Success
Sigma successfully shifted its commercial strategy to selling through traders as distributors, achieving higher realized prices and capturing more value. This strategy resulted in prices 19% above the benchmark in the summer seasonality.
Strategic Expansion Plans
Sigma announced plans to expand production capacity to 100,000 tonnes per year of LCE equivalent by 2026, with a focus on building a lithium sulphate chemical plant and increasing production efficiency.
Lowlights
Provisional Pricing Adjustments
Sigma experienced significant provisional pricing adjustments, with $29 million in total for the year, mostly related to fluctuating lithium prices from the fourth quarter of the previous year.
Challenges with Mobile Crushers
The company faced operational challenges with mobile crushers, leading to additional costs of $25 per tonne. This issue is expected to be resolved by replacing the crushers in the upcoming months.
Company Guidance
During the Sigma Lithium Third Quarter 2024 earnings call, the company highlighted several key metrics underscoring their robust performance. They achieved a production rate of 22,000 tonnes sold per month, surpassing their target of 60,000 tonnes for the quarter. The company maintained low CIF cash costs at $513 per tonne, generating $34.5 million in operational cash flow. Sales volumes were reported at 57,483 GLT with sales revenue of $44.2 million and a cash gross margin of 38%. Sigma also secured a $487 million BNDES Development loan to fully fund the construction of Phase 2, with a favorable fixed interest rate of 2.5% and a maturity of 16 years. Notably, the company achieved plant recoveries of 70% and emphasized their strategic pivot to achieve higher realized prices compared to industry benchmarks, with provisional price adjustments totaling $23.3 million.Sigma Lithium Corporate Events
Sigma Lithium Surpasses 2024 Goals, Eyes 2025 Growth
Dec 30, 2024
Sigma Lithium has surpassed its fourth-quarter 2024 production targets by producing 75,000 tonnes of its eco-friendly Quintuple Zero Green Lithium, reaching a total of 240,000 tonnes for the year. The company is set to exceed its 2025 target of 270,000 tonnes, thanks to its innovative and sustainable approaches in lithium production.
Sigma Lithium Announces Major Sustainable Lithium Shipment
Dec 23, 2024
Sigma Lithium is set to ship 22,650 tonnes of its environmentally sustainable Quintuple Zero Green Lithium to Abu Dhabi, highlighting its operational success and consistent delivery schedule. The company has achieved significant production efficiency, enabling large-scale shipments and is planning to double its production capacity in 2025. This move aligns with Sigma Lithium’s commitment to sustainable lithium production for electric vehicle batteries.
Sigma Lithium Secures Key Environmental License
Dec 21, 2024
Sigma Lithium has received unanimous approval for a Triple Environmental License for its Barreiro mine in Brazil, ensuring sustainable operations for the next 16 years. The company has proactively engaged with local communities, investing in social infrastructure to support future growth and expansion. This milestone solidifies Sigma Lithium’s commitment to environmentally responsible lithium production.
Sigma Lithium Reaches Full Capacity, Ships Record Lithium
Dec 3, 2024
Sigma Lithium has reached full production capacity, shipping a record 27,500 tonnes of its eco-friendly lithium to Abu Dhabi, highlighting its operational excellence. The company maintains robust production capabilities, with consistent monthly shipments and plans to double its capacity with a second plant.
Sigma Lithium’s Strong Q3 Results and Strategic Growth
Nov 18, 2024
Sigma Lithium surpassed its production guidance in Q3 2024 and maintained low operating costs, resulting in a $34 million operating cash flow. The company also signed a loan agreement for its plant expansion, further securing its position in the lithium market. Sigma’s strategic moves enabled them to achieve higher sales prices and reduce debt significantly.
Sigma Lithium to Announce Earnings and New Executive
Nov 14, 2024
Sigma Lithium is set to release its third-quarter 2024 financial results on November 15, 2024, and has appointed Irina Axenova as Vice President of Investor Relations. The company, known for its sustainable lithium production, continues to play a significant role in the electric vehicle battery supply chain.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.