What happened
Investors' reaction to MP Materials' (MP 2.98%) big earnings beat last week was... underwhelming.
On Thursday evening, MP Materials reported $99.8 million in Q3 2021 revenue, where Wall Street had expected less than $74 million. Instead of the Street's predicted $0.16-per-share profit, MP Materials earned $0.23 per share -- and so the stock declined 1.2% Friday.
No matter. MP Materials more than made up for lost time on Monday, closing the day up 13.9%.
Image source: Getty Images.
So what
The self-proclaimed "largest rare earth materials producer in the Western Hemisphere" grew its sales 143% year over year in the third quarter and nearly tripled its net earnings as mining activity ramped up. Granted, a very large increase in share count between last year and this meant that the earnings per share didn't grow as much. Still, EPS was up a solid 15% year over year, and MP Materials has now earned a grand total of $0.47 per share for the first three quarters of the year.
On top of all that, management says it is on track "to restore the full rare earth supply chain to the United States, including progress on our Stage II optimization project and Stage III downstream expansion into magnetic," so that MP can capture more of the value chain in production of rare earth magnets.
Now what
Can MP keep up this kind of performance?
Management didn't provide guidance for Q4, but if we assume that analysts are correct with their projections for another $0.24 or so in per-share profit this coming quarter, then MP is on track to earn about $0.71 per share for the year. That would easily beat Wall Street projections for $0.62.
Granted, there's still the question of whether MP Materials stock (which would cost about 59 times current-year earnings if it does earn $0.71 this year) is a bargain. Based on today's price action, however, the prospect that they may be buying into an overpriced stock doesn't seem to concern investors too much at the moment.
