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Bear of the Day: Piedmont Lithium (PLL)

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It's not smooth sailing for Piedmont Lithium (PLL - Free Report) as earnings estimates have been cut in the last 60 days. This Zacks Rank #5 (Strong Sell) is still expected to grow earnings in 2023.

Piedmont Lithium is a lithium producer. It is developing its 100%-owned Piedmont Lithium Project in North Carolina and Tennessee to supply lithium to EV and battery storage markets in the United States. It also has partnerships in Quebec with Sayona Mining and in Ghana with Atlantic Lithium.

Piedmont is Finally Shipping Lithium

On Aug 29, 2023, Piedmont announced it had taken partial payment for the sale of 15,000 dry metric tons of 5.4% Li2O lithium concentrate on an FOB vessel basis to a major international trading company.

Vessel loading was scheduled for mid-September.

The pre-payment increased Piedmont's cash position to approximately $100 million.

North American Lithium ("NAL") started commercial production in March 2023 and delivered its first joint venture shipment of 20,500 dmt to a third-party in early August.

“This is a significant day for Piedmont Lithium as we announce the first shipment of lithium concentrate under our offtake agreement with NAL and the receipt of a prepayment, which significantly increases our cash position,” said Keith Phillips, President and CEO of Piedmont.

Analysts Cut Earnings Estimates

The analysts have recently gotten more pessimistic about Piedmont's earnings outlook, even though the company has started shipments.

Piedmont is expected to see it's first positive earnings quarter in the third quarter of this year as it saw a loss of $0.55 per share in the second quarter and the Zacks Consensus is calling for $1.68.

2023 earnings are now expected to be $5.42 up from a loss of $2.02 last year, which is an earnings gain of 368.3%. But 2 estimates have been cut in the last 60 days which has pushed the earnings estimate down from $6.37 to $5.42. The analysts are just a little less bullish.

It is these cuts which have given Piedmont the Zacks Rank of #5 (Strong Sell).

Earnings are expected to jump again in 2024 to $13.80, which is a gain of 154.6%. But those estimates have been pared back in the last 2 months as well.

Shares at 52-Week Low

The shares of lithium producers tend to move with the price of lithium, which as fallen sharply this year. Shares of Piedmont recently hit 52-week lows.

It is down 27.2% over the last year but shares haven't broken down completely yet.

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Shares are cheap on a P/E basis, trading at 7.2x forward earnings.

If you are interested in Piedmont Lithium, be sure to tune into the next earnings report for an update on its projects, deliveries, and cash position. The estimates are likely to change again at that time which means the Zacks Rank will change too. The Zacks Rank is a short-term recommendation of just 1 to 3 months.

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