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Assessing Lithium Americas (TSX:LAC) Valuation After Its Recent 90-Day Share Price Surge

Simply Wall St · 1d ago

Lithium Americas (TSX:LAC) has quietly climbed about 89% over the past 3 months, even as near term returns cooled. That kind of move naturally raises the question of what the market is now pricing in.

See our latest analysis for Lithium Americas.

With the share price now at $7.33 and a 90 day share price return of nearly 89%, momentum has clearly been building, even though the 1 year total shareholder return of 42% still reflects a bumpier ride.

If Lithium Americas has you thinking about growth themes more broadly, this could be a good moment to explore fast growing stocks with high insider ownership for other high potential ideas backed by committed insiders.

With Lithium Americas now trading just shy of analyst targets after a powerful 90-day surge, is the recent pullback setting up a fresh entry point, or is the market already pricing in the next leg of growth?

Price to Book of 3.4x, Is it justified?

At a last close of CA$7.33, Lithium Americas trades on a price to book ratio of 3.4x, a richer tag than the broader Canadian metals and mining group.

The price to book multiple compares the company’s market value to its net assets on the balance sheet, a common yardstick for asset heavy resource developers without meaningful revenue or profits. For a pre revenue, loss making business like Lithium Americas, investors are effectively paying a premium to the underlying assets in anticipation of future production and cash flows from projects like Thacker Pass.

Compared with the wider Canadian metals and mining industry average of 2.7x, the 3.4x multiple looks demanding. This implies the market is assigning more value to Lithium Americas development pipeline than to the typical peer. However, versus its closer peer set, where the average price to book ratio sits at a much higher 5.3x, the same 3.4x starts to look more measured and suggests the market is not pricing in the most aggressive outcomes.

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

Result: Price to Book of 3.4x (ABOUT RIGHT)

However, investors still face meaningful risks, including permitting or construction setbacks at Thacker Pass and weaker lithium prices that could undermine the optimistic valuation.

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

Build Your Own Lithium Americas Narrative

If you see the story differently, or simply want to dig into the numbers yourself, you can shape a custom view in minutes: Do it your way.

A great starting point for your Lithium Americas research is our analysis highlighting 5 important warning signs that could impact your investment decision.

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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.