PLS and ASX Ltd: 2 ASX Shares Worth a Closer Look

August 30, 2024 03:34 PM AEST | By Team Kalkine Media

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PLS and ASX Ltd: 2 ASX Shares Worth a Closer Look — Image source: shutterstock

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The share price of Pilbara Minerals Ltd has fallen by 26.9% since the start of 2024, while the ASX Ltd share price is 14.0% above its 52-week lows.

PLS (ASX:PLS) Overview

Pilbara Minerals is a major player in the lithium sector, owning 100% of the Pilgangoora operation, the world’s largest independent hard-rock lithium mine, acquired in 2014. The company's core activities include the extraction and sale of spodumene concentrate, which contains lithium. Sales are conducted through offtake agreements and the Battery Material Exchange (BMX) platform. Key offtake partners include Great Wall Motors and POSCO.

The demand for lithium has surged recently, driven by growth in electric vehicles and renewable energy technologies. While Pilbara is seen by some as a 'pure play' on the green tech sector, its revenue remains exposed to the volatile global spodumene market.

ASX Ltd (ASX:ASX) Overview

ASX Ltd operates Australia’s primary national securities exchange, providing services such as securities and derivatives trading, clearing, and settlement. It also offers access to a range of financial products, including shares, exchange-traded funds (ETFs), managed funds, and real estate investment trusts (REITs).

PLS Share Valuation

Pilbara Minerals currently trades at a price-to-sales ratio of 2.16x, below its five-year average of 3.49x. This suggests the shares are currently valued lower compared to their historical levels. However, it's important to view this metric in context, as it is only one of many valuation methods.

Meanwhile, ASX Ltd shares are trading at a price-to-sales ratio of 7.55x, compared to their five-year average of 8.12x, indicating a valuation below historical norms. However, relying solely on one metric, such as a price-to-sales ratio, should not be the basis for any final decisions. Multiple valuation techniques, such as Discounted Cash Flow (DCF) and Dividend Discount Models (DDM), offer more comprehensive insights into a company's value.

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